TRACKING THE CYCLES
Western
Canadian
Conventional
Oil & Gas
Comparison
Financial and
Operating Results
For 87 Juniors
& 34 Trusts
Q3 2005
Featuring
Updated
Profiles From:
Acclaim Energy Trust (Canetic)
Crescent Point Energy Trust
Daylight Energy Trust
Pengrowth Energy Trust
Burmis Energy
Delphi Energy
Diamond Tree Energy
Diaz Resources
Galleon Energy
Great Plains Exploration
Innova Exploration
Rival Energy
Titan Exploration
Valiant Energy
Zapata Energy
PM41045505
President’s
Message
Q3 2005
TRACKING THE CYCLES
The third quarter of 2005 turned out to be fantastic for investors
in the Canadian oil and gas sector. The heated market took many
people by surprise, including me, since this is the period that
includes the summer when things are usually quiet. The third
quarter was anything but quiet.
The kind of investment returns realized in the third quarter – a
total return of more than 25 percent for trusts and 29 percent
for juniors - cannot last. In fact, the past two months showed
negative median returns for both juniors and trusts as the market
cycled back. Capital gains don’t happen in a straight line.
Relatively short but significant shifts in the
market are one of many cycles that affect
investors of oil and gas companies and trusts.
The Canadian oil and gas sector has more
cycles in it than the Tour de France. These
cycles range from macroeconomic cycles to
individual company growth cycles. Since day
one in this sector I was told to watch for these
cycles and to try to make the most of them.
It’s not an easy task considering how many
factors are working at once and how easy it is
to embrace the current way of seeing things.
To gain a comprehensive understanding of individual companies and
trusts and to get a good feel for their potential, it is necessary to
conduct more in-depth research. The two-page profiles contributed
by supporting companies and trusts are a good starting point.
At Iradesso, we see the report as a chance to educate investors
about the Canadian oil and gas industry, to attract more attention
to the junior and trust sectors and to help match numerous
companies with potential investors.
since day
one in this sector
I was told to watch
for these cycles
and to try and
make the most
of them
Readers can use the information in this report as a starting point
to identify the companies and trusts with the best opportunities
for growth, stable returns and potentially their
own up-cycle. If successful, it matters
less what happens on a macro level
because the strongest and most
opportunistic
companies
will make the best of the
situation and provide the
best return to investors.
As usual I would like
to remind readers that
although benchmarking
the operating and
financial results of one
company or trust against
its peers is useful to
gauge past performance, it
is not necessarily indicative
of future results. Some of
the companies and trusts
that have looked expensive, less
2
efficient or even over-leveraged in past issues of the iQ Report have
been some of the best performers since.
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
For this edition of the iQ Report, we have added
an overview of publicly-traded companies with
international operations that trade on the TSX
or TSX Venture Exchange. With this addition, we
are covering one more aspect of the oil and gas
sector, but we recognize there are still quite a
few sectors left out. Depending on the level of
interest, in the future we may add lists showing
publicly-traded unconventional companies,
senior producers, integrated companies and
service firms.
The iQ Report continues to be extremely well received by the
investment community. The feedback we collect helps shape the
iQ Report’s evolution and motivates the Iradesso team as we work
together quarter after quarter to crunch all the numbers. Please
keep letting us know how we are doing.
Best regards,
Peter Knapp,
President, Iradesso Communications
December 6, 2005
403.503.0144 x202
[email protected]
www.iradesso.com
TABLE
OF
CONTENTS
RELE
IFC
1
2
President’s Message and Highlights
Table of Contents
Highlights
4
Trust Compar i son Char t s
4
10
11
Q3 Production (boe/d)
Q3 Production Mix – Natural Gas Weighting (%)
Change in Production – Q2 2005 to Q3 2005 (%)
Change in Production per Unit – Q2 2005 to Q3 2005 (%)
Enterprise Value Versus Q3 Production ($ per boe/d)
Q3 Cash Flow Netback ($/boe)
Q3 Operating Expenses ($/boe)
Q3 General and Administrative Expenses ($/boe)
Q3 Depletion, Depreciation and Accretion Expenses ($/boe)
Q3 Annualized Distribution Yield (%)
Q3 Payout Ratio (%)
Q3 Net Debt to Annualized Cash Flow
Q3 Total Return - Capital Gains and Distributions (%)
Trusts Data Table
12
Trust Prof i l es
12
14
16
18
Acclaim Energy Trust (Canetic)
Crescent Point Energy Trust
Daylight Energy Trust
Pengrowth Energy Trust
21
22
Oil and Gas Reporting Trends — CNW
Juniors and Trusts Entrances and Exits
24
Junior Compar i son Char t s
24
25
26
27
28
29
30
31
32
33
34
35
36
Q3 Production (boe/d)
Q3 Production Mix - Natural Gas Weighting (%)
Change in Production Q2 2005 to Q3 2005 (%)
Change in Production per Share
Enterprise Value Versus Q3 Production ($ per boe/d)
Q3 Cash Flow Netback ($/boe)
Q3 Operating Expenses ($/boe)
Q3 General and Administrative Expenses ($/boe)
Q3 Depletion, Depreciation and Amortization Expenses ($/boe)
Annualized Q3 Cash Flow Multiples
Net Debt to Annualized Cash Flow
Q3 Share Price Change
Juniors Data Table
37
Emerging Companies Watch List
5
6
7
8
9
SCH
E
ASE
Year E D U L E
and Q nd 2005
1
w
eek o
f Jun
2006
e 9, 2
006
Please e-mail us at [email protected]
to ensure you receive your copy
of the iQ Report
The information used to compile this report is publicly
available. Iradesso provides the comparison to shine the
spotlight on this portion of the energy industry, and to
communicate the achievements and growth potential
of oil and gas companies and trusts. It is provided
for information only and is not intended to serve as
investment advice. Iradesso can not be held responsible
for accuracy and all readers are encouraged to conduct
their own research.
38
Junior Prof i l es
38
40
42
44
46
48
50
52
54
56
58
Burmis Energy
Delphi Energy
Diamond Tree Energy
Diaz Resources
Galleon Energy
Great Plains Exploration
Innova Exploration
Rival Energy
Titan Exploration
Valiant Energy
Zapata Energy
60
International Oil & Gas Companies Comparison
400, 805 - 10th Avenue SW
Calgary, AB Canada T2R 0B4
T - 403.503.0144
toll-free: 1.866.415.1070
[email protected]
www.iradesso.com
PUBLICATIONS MAIL AGREEMENT
NO. 41045505
RETURN UNDELIVERABLE CANADIAN
ADDRESSES TO:
IRADESSO COMMUNICATIONS
400, 805 10 AVENUE SW
CALGARY AB T2R 0B4
Cover photo by
Eva Serrabassa
NEW
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
1
Highlights
From
Q3 2005
TRUSTS
JUNIORS
25.7%:
29.3%: the median Q3 return from capital gains
the median Q3 return including
distributions and capital gains for the trusts
for the juniors
34:
87:
the number of conventional energy trusts
that fit our criteria for Q3, one less than in Q2
922,000:
daily production in barrels of oil
equivalent (boe) of all the conventional trusts
combined
$30.20:
the median cash flow netback made
by trusts on each boe produced during Q3 - the
highest netbacks to date
$75,090: the median enterprise value (market
capitalization plus net debt) per flowing boe per
day of production from the trusts - valuing them
lower than the juniors per flowing boe
this is the highest number of juniors that
have fit our inclusion criteria since we started
publishing the iQ Report in June 2003 based on the
first quarter of 2003
213,880: daily production in barrels of oil
equivalent (boe) of all the juniors combined
$33.67:
the median cash flow netback made
by juniors on each boe produced during Q3 - the
highest netbacks to date
$82,946: the median enterprise value (market
$1.29 billion: the total amount of distributions
capitalization plus net debt) per flowing boe per
day of production from the juniors - valuing them
higher than the trusts per flowing boe
paid out to unit holders of conventional energy
trusts during Q3
7.2:
55%: the median cash flow payout ratio for
distributions paid by trusts during the quarter - the
lowest to date
$900 million: the total amount of royalties
paid out on production by the trusts
the median enterprise value multiple of
annualized Q3 cash flow - lower than previous
quarters because of exceptionally high commodity
prices during the quarter
0.6: the median net debt multiple of annualized
Q3 cash flow - also lower than previous quarters
due to high commodity prices
TRUSTS INCLUSION CRITERIA
ASSUMPTIONS
• Primary business must be conventional oil and gas
development and production
• Majority of production must be from Western Canada
• Units must be publicly traded on the TSX
• Barrels of oil equivalent calculated using 6 mcf = 1 boe
• Net debt calculated by including bank debt,
debentures and working capital
• For companies with A/B share structures, B shares
have been converted to A shares using September 30,
2005 share prices.
JUNIORS INCLUSION CRITERIA
• Primary business must be oil and gas exploration,
development and production
• Q3 2005 production must fall between
500 and 15,000 boe/d
• Majority of production must be from Western Canada
• Must be publicly traded on the TSX or TSX
Venture Exchange
2
CORRECTION NOTICE
In our previous iQ Report, comparing second quarter 2005
results, we miscalculated some data for Thunder Energy
Trust. We used the units outstanding and debt levels
from before their reorganization, combined with their
unit price after the reorganization to come up with an
enterprise value. As a result, Thunder’s enterprise value per
flowing boe was not comparable to its peers and should
be disregarded.
ABBREVIATIONS
DISCLAIMER
bbls • barrels of oil
boe • barrels of oil equivalent
boe/d • barrels of oil equivalent per day
mcf • thousand cubic feet
mmcf • million cubic feet
NGLs • natural gas liquids
This report is provided by Iradesso Communications
Corp. as a service to the reader without responsibility for
accuracy. This report does not constitute a solicitation or
recommendation for the purchase or sale of any security.
Iradesso Communications must be credited with developing
the iQ Report if any part of it is reproduced. The companies
that have provided a corporate profile for this report have
paid Iradesso a fee.
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
CONVENTIONAL
ENERGY TRUST
COMPARISON
INCLUSION CRITERIA
Primary business must be conventional oil and gas development and production
Majority of production must be from Western Canada
Units must be publicly traded on the TSX
4
Tr ust Compar i son C h a r ts
4
Q3 Production (boe/d)
Q3 Production Mix – Natural Gas Weighting (%)
Change in Production – Q2 2005 to Q3 2005 (%)
Change in Production per Unit – Q2 2005 to Q3 2005 (%)
Enterprise Value Versus Q3 Production ($ per boe/d)
Q3 Cash Flow Netback ($/boe)
Q3 Operating Expenses ($/boe)
Q3 General and Administrative Expenses ($/boe)
Q3 Depletion, Depreciation and Accretion Expenses ($/boe)
Q3 Annualized Distribution Yield (%)
Q3 Payout Ratio (%)
Q3 Net Debt to Annualized Cash Flow
Q3 Total Return - Capital Gains and Distributions (%)
Trusts Data Table
5
6
7
8
9
10
11
12
Tr u s t P rofi le s
12
14
16
18
Acclaim Energy Trust (Canetic)
Crescent Point Energy Trust
Daylight Energy Trust
Pengrowth Energy Trust
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
3
trust
COMPA RISO N
Q3 Production (boe/d)
Penn West
Enerplus
Pengrowth
ARC
Bonavista
Acclaim
Primewest
Harvest
Petrofund
Starpoint
Baytex
Provident
Paramount
Viking
Trilogy
Peyto
Shiningbank
Advantage
NAL
Progress
Esprit
Daylight
Ketch
Crescent Point
Thunder
Fairborne
Focus
Freehold
Vault
Enterra
Zargon
NAV
Sequoia
Bonterra
99,802
79,406
58,894
55,592
50,579
40,227
40,121
37,549
37,485
35,126
34,774
33,768
I
n the trust world there are
advantages to being big and
advantages to being small. Large
trusts may have more stability,
better market recognition and access
to capital, while small trusts have
the ability to act quickly and grow
production without needing to replace
more sizeable production declines.
0
20,000
DOES SIZE MATTER?
26,567
25,358
24,404
22,646
21,252
20,006
19,710
17,481
16,759
14,424
12,724
12,530
11,575
11,321
10,036
8,973
8,350
8,284
8,036
7,997
6,485
3,629
40,000
60,000
80,000
100,000
Although Provident Energy Trust had
Q3 oil and gas production of 37,768
boe/d we have only included them in
the charts on this page. Provident’s
other business units make further
comparisons inconsistent.
Canadian Oil Sands Trust, with Q3
production of 85,942 boe/d, has
not been included because oil sands
production cannot be compared to
conventional production.
120,000
Q3 Production Mix — Natural Gas Weighting (%)
Median = 57%
Paramount
Ketch
Peyto
Trilogy
Esprit
Progress
Shiningbank
Focus
Primewest
Fairborne
Sequoia
Thunder
Advantage
Daylight
Vault
Enerplus
Bonavista
Zargon
ARC
Viking
Penn West
Pengrowth
NAV
Acclaim
Petrofund
NAL
Freehold
Provident
Enterra
Starpoint
Baytex
Crescent Point
Bonterra
Harvest
100
82
80
79
79
77
76
75
73
73
71
64
63
63
62
55
CHOOSE YOUR MIX
50
50
48
46
46
45
43
41
40
37
36
36
31
27
26
11
0
4
A
58
58
10
20
30
40
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
50
60
70
80
90
100
s is evident from this chart, some
trusts concentrate on developing
production in one commodity, while
others like to have a balance of both.
Oil and natural gas volumes are made
comparable by converting natural gas
from thousands of cubic feet to barrels
of oil equivalent at a ratio of 6:1.
Our statistics show that in general
trusts are less focused on natural
gas than juniors. This is the second
quarter in a row whereby the trusts
have had a median natural gas
weighting of 57 percent.
trust
C O M PA R IS O N
Change in Production — Q2 2005 to Q3 2005 (%)
Median = +5%
Starpoint
Vault
Thunder
Enterra
Viking
Esprit
Freehold
Ketch
Sequoia
Shiningbank
Harvest
Crescent Point
NAL
Paramount
Baytex
Enerplus
Fairborne
Petrofund
Bonavista
NAV
Bonterra
Pengrowth
ARC
Peyto
Acclaim
Trilogy
Advantage
Penn West
Progress
Primewest
Daylight
Zargon
Focus
245
145
54
38
25
24
23
18
15
12
9
9
7
7
6
5
5
4
4
3
2
2
1
1
1
0
FIGHTING
PRODUCTION DECLINES
B
0
0
-1
-1
-2
-2
-3
-50
0
50
100
150
200
250
y drilling wells, conducting
field optimization activities or
by acquiring new assets trusts can
maintain stable production or even
grow. Many of the trusts in this list
at one time had only a fraction of
the production they have now.
If no effort was made by a conventional
oil and gas trust to stabilize or increase
production, their production would
naturally decline at rates varying from
15 to 35 percent per year depending
on their commodity mix, depth of
wells and age of assets. Anomalous
events can occasionally spell even
higher declines.
300
Change in Production per Unit — Q2 2005 to Q3 2005 (%)
Median = 0%
23
Viking
Vault
Enterra
Starpoint
Esprit
Ketch
NAL
Baytex
Freehold
Bonavista
Bonterra
Crescent Point
NAV
Petrofund
ARC
Trilogy
Shiningbank
Paramount
Pengrowth
Enerplus
Advantage
Fairborne
Penn West
Peyto
Progress
Acclaim
Harvest
Daylight
Zargon
Primewest
Focus
Sequoia
21
14
13
9
7
6
5
4
2
2
2
T
rusts look to conduct development
activities and acquisitions that
offer growth on a per unit basis. Over
the long term it is vital for trusts
to at least maintain stable amounts
of production per unit, otherwise
distributions could be affected,
depending on commodity prices.
1
PER UNIT GROWTH
THE BEST KIND
1
1
0
0
0
0
0
0
0
-1
-1
-1
-2
-2
-3
-3
-3
-3
-10
-15
-10
-5
0
5
10
15
20
It is important to note that changing
debt levels are not factored into
this measurement. A trust may have
increased debt levels as another
source of capital in order to get more
production per unit.
This calculation uses quarterly production
divided by weighted average units
outstanding for each period.
This chart does not include Thunder.
25
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
5
trust
COMPA RISO N
Enterprise Value Versus Q3 Production ($ per boe/d)
Median = $75,090 per boe/d
Peyto
Enterra
Freehold
Bonterra
Focus
Shiningbank
Sequoia
ARC
Trilogy
Progress
Fairborne
Enerplus
Advantage
NAL
Bonavista
Primewest
Paramount
Starpoint
Viking
Zargon
Crescent Point
Pengrowth
Esprit
Penn West
Petrofund
Ketch
Thunder
Acclaim
Harvest
Vault
Daylight
Baytex
NAV
122,775
108,860
108,414
104,291
102,024
94,450
93,871
93,411
92,844
90,920
86,431
83,738
79,515
76,988
76,466
75,829
75,090
74,891
74,352
73,437
71,544
66,630
64,909
64,557
63,913
62,352
60,103
58,580
57,170
55,743
54,215
47,634
47,250
0
20,000
40,000
60,000
80,000
CAPITALIZING
PRODUCTION
T
100,000
120,000
his measurement shows each
trust’s enterprise value per flowing
boe/d of Q3 production. Enterprise
value is calculated by multiplying
the unit price on November 30 by
the weighted average number of
units outstanding during Q3 (market
capitalization) and adding net debt
and debentures outstanding.
A high value means the markets are
placing more value on the production
of that trust for one reason or another.
This makes sense when a trust has
longer life reserves or higher netbacks
than their peers.
140,000
Q3 Cash Flow Netback ($/boe)
Median = $30.20/boe
Freehold
Peyto
Bonterra
Penn West
NAL
Shiningbank
Fairborne
Progress
Thunder
ARC
Daylight
Focus
Petrofund
Starpoint
Paramount
Trilogy
Viking
Advantage
Bonavista
Harvest
Zargon
Ketch
Pengrowth
Esprit
Crescent Point
Primewest
Sequoia
Vault
NAV
Enerplus
Acclaim
Enterra
Baytex
47.12
37.04
36.57
36.47
35.04
34.64
33.99
33.09
32.90
32.87
32.86
32.25
32.22
31.38
30.57
30.36
30.20
30.20
30.14
29.96
29.56
29.47
29.34
29.28
28.87
28.83
28.04
27.90
27.87
26.59
25.05
PRODUCTION ECONOMICS
21.81
21.10
-
6
C
5.00
10.00
15.00
20.00
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
25.00
30.00
35.00
40.00
45.00
50.00
ash flow netbacks are similar to
sales margins in other industries.
They indicate how much cash flow
a trust generates from each boe of
production. Higher netbacks are
especially important during periods
of lower commodity prices when
lower netback production may
become uneconomical.
The price received for oil and gas
production is one of the biggest factors
in determining netbacks. Prices received
are in turn influenced by the world
market for oil and natural gas as well
as hedging programs and production
quality. During Q3, cash flow netbacks
were exceptionally high, with a median
approximately 20 percent higher than
those acheived in Q2.
trust
C O M PA R IS O N
Q3 Operating Expenses ($/boe)
Median = $8.52/boe
Bonterra
Vault
NAV
Viking
Pengrowth
Petrofund
Enterra
Daylight
Esprit
Harvest
Fairborne
Penn West
Acclaim
Baytex
Primewest
NAL
Zargon
Thunder
Trilogy
Crescent Point
Advantage
Sequoia
Enerplus
Starpoint
Ketch
Shiningbank
ARC
Bonavista
Paramount
Progress
Focus
Freehold
Peyto
15.09
11.87
10.76
10.74
10.59
10.31
10.10
9.78
9.40
9.39
9.20
9.11
8.98
8.59
8.56
8.55
8.52
8.51
8.48
THE
BIGGEST CASH COST
T
7.83
7.72
7.69
7.69
7.53
7.30
7.18
7.07
6.94
6.52
5.70
3.56
2.03
1.70
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
he biggest cash cost of producing
oil and gas is often the operating
expenses. This means it is also the
most important cost to control.
When separated in trusts’ financial
statements, the operating expenses
shown in this chart do not include
transportation costs associated with
moving the oil and gas to a market
point. Most trusts now show a
separate expense line on their income
statements for transportation, while
others may include it as part of their
net revenue or operating costs.
16.00
Q3 General and Administrative Cash Expenses ($/boe)
Median = $1.29/boe
T
Sequoia
Enterra
Bonterra
Zargon
Pengrowth
Vault
Viking
Daylight
NAL
Acclaim
Primewest
Crescent Point
Petrofund
Esprit
Enerplus
NAV
ARC
Baytex
Fairborne
Focus
Freehold
Harvest
Shiningbank
Ketch
Advantage
Paramount
Trilogy
Progress
Starpoint
Penn West
Bonavista
Peyto
his measurement shows efficiency
of office related costs on a per boe
basis. Factors include the number
of staff, their salaries and benefits,
contractors, service agreements,
lease
terms,
communications
materials, processes and systems.
The two trusts on this chart with
the highest G&A during the quarter,
just finished reorganizations, which
probably attributed to some of their
higher costs.
3.06
2.90
2.18
2.04
1.94
1.85
1.68
1.67
1.64
1.59
1.54
1.53
SALARIES AND RENT
1.40
1.37
1.34
1.34
1.25
1.20
1.19
1.17
1.17
1.08
1.07
1.06
1.00
0.97
0.95
0.83
0.63
0.57
0.49
0.13
-
0.50
1.00
1.50
2.00
2.50
3.00
G&A numbers can also be affected
by the method a company uses in
accounting for expenses, whether
they are capitalized or not. Wherever
possible we have only included cash
G&A expenses and management fees
shown on earnings statements, not
non-cash items such as capitalized
costs or unit-based compensation.
The lower median during Q3 versus Q2
is a reflection of an improved ability
in our reseach process to separate the
non-cash unit-based compensation
from cash G&A expenses. For Q3, the
median non-cash G&A $0.64 per boe
with a wide range from $0 to $8.94.
This chart does not include Thunder due
to one-time expenses
3.50
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
7
trust
COMPA RISO N
Q3 Depletion, Depreciation and Accretion Expenses ($/boe)
Median = $15.47/boe
23.79
22.84
22.72
Enterra
Freehold
Starpoint
Sequoia
Thunder
Shiningbank
Advantage
NAV
Ketch
NAL
Viking
Acclaim
Fairborne
Vault
Paramount
Focus
Primewest
Crescent Point
Trilogy
Esprit
Petrofund
Daylight
Progress
Pengrowth
Harvest
Enerplus
Zargon
ARC
Baytex
Penn West
Bonavista
Bonterra
Peyto
21.38
21.27
19.67
18.61
18.32
17.95
17.56
17.27
16.72
16.57
15.85
15.52
15.49
15.47
15.44
15.36
14.82
14.80
14.54
14.26
14.23
14.18
13.47
13.02
12.86
12.74
11.87
WORKING TOWARDS
THE BOTTOM LINE
D
10.80
7.51
6.85
-
5.00
10.00
15.00
20.00
epletion, depreciation and accretion
expenses can be considered
somewhat of an approximation
of finding and development costs
for oil and gas reserves. Depletion
and depreciation relates mainly to
accounting for the production of oil
and gas reserves, and the necessary
removal of value from the balance
sheet. Higher amounts mean that
reserves values are being decreased
more rapidly. This could be because
they were valued too highly in the
first place, or they are losing value at a
faster pace for any number of reasons.
Accounting styles vary in that some
trusts show accretion as a separate
line item, while others include it
with depletion and depreciation.
Either way, we add the accretion in
for this calculation.
25.00
Q3 Annualized Distribution Yield (%)
Median = 10.4%
Thunder
Ketch
Advantage
Esprit
Vault
NAV
Pengrowth
Paramount
Starpoint
Daylight
Viking
Harvest
Bonterra
Baytex
NAL
Primewest
Acclaim
Freehold
Sequoia
Crescent Point
Progress
Shiningbank
Bonavista
Petrofund
Penn West
Trilogy
Focus
Enterra
Fairborne
Enerplus
ARC
Zargon
Peyto
14.5
14.4
14.4
13.5
13.4
13.3
12.9
12.4
11.7
9.5
9.4
9.3
9.1
8.9
8.4
8.3
8.2
8.1
7.8
6.1
5.5
0.0
8
YIELD FROM THE FIELD
11.1
10.9
10.8
10.7
10.7
10.7
10.6
10.4
10.3
10.2
10.1
10.0
2.0
4.0
6.0
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
8.0
10.0
12.0
14.0
16.0
W
e have come up with a
hypothetical income yield for
the trusts by showing the annualized
Q3 distributions as a percentage of
unit price on November 30, 2005.
Since unit prices and distributions
can fluctuate significantly for oil and
gas trusts, one should not look at this
as a guaranteed return.
We have calculated the income yields
based on distributions declared per
share during the quarter.
trust
C O M PA R IS O N
Q3 Payout Ratio (%)
Median = 55.5%
Distributions paid during the quarter as
a percentage of cash flow
Enterra
Bonterra
Advantage
Sequoia
Pengrowth
Shiningbank
Enerplus
Ketch
Focus
Starpoint
Esprit
Crescent Point
Primewest
Paramount
Acclaim
Trilogy
Freehold
Progress
NAL
Vault
Bonavista
Peyto
ARC
Petrofund
Baytex
Fairborne
NAV
Penn West
Daylight
Viking
Zargon
Harvest
101.8
Distributions plus capital expenditures
(excluding acquisitions and divestitures)
as a percentage of cash flow
77.9
77.4
72.2
68.9
67.6
67.0
62.6
T
he black bars represent the
percentage of Q3 cash flow that
was paid out as distributions. The
grey bars show distributions plus
capital expenditures as a percentage
of cash flow.
61.4
60.7
60.0
58.1
57.9
57.2
56.4
PAY SOME, SPEND SOME
55.7
55.4
54.6
54.5
51.4
46.1
46.0
45.7
45.1
44.8
42.4
41.3
38.0
37.3
34.9
34.1
Unless a trust is accessing new
capital, it is important that both the
black bar and the white bar average
less than 100 percent over time.
We have calculated the payout ratio
based on distributions paid during
the quarter, as shown on the earnings
statement, not distributions declared.
The difference is that trusts normally
have reinvestment programs and that
they normally pay distributions a
month after declaring them.
This chart does not include Thunder who
began paying distributions during Q3.
28.3
-
50.0
100.0
150.0
200.0
250.0
Q3 Net Debt to Annualized Cash Flow
Median = 0.9
Enterra
Baytex
Advantage
Sequoia
Vault
NAV
Esprit
Ketch
Viking
Starpoint
Thunder
Harvest
Enerplus
Daylight
Acclaim
Paramount
Primewest
Fairborne
Trilogy
Crescent Point
Progress
Bonavista
NAL
Shiningbank
Pengrowth
Focus
Peyto
Penn West
Freehold
ARC
Petrofund
Zargon
Bonterra
1.9
1.8
1.8
1.7
1.6
1.5
1.5
1.4
1.3
1.2
1.1
1.1
1.0
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.9
0.8
0.8
0.8
0.8
LEVERAGING WITH
LOWER COST CAPITAL
F
0.7
0.6
0.6
0.5
0.5
0.2
0.2
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
or trusts, it could often be
considered cheaper to access
capital by incurring debt at low
interest rates, rather than issuing new
units that often have a higher cost in
terms of future distributions that will
need to be paid.
While none of the trusts have a
positive working capital position,
there is a large range from those that
have very little debt to those with
higher debt leverage at the top of
this chart.
We have included working capital,
bank debt and convertible debentures
in our calculation of net debt.
2.0
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
9
trust
COMPA RISO N
Q3 Total Return - Capital Gains and Distributions (%)
July through September Median = 25.7%
July through November Median = 23.8%
Fairborne
Trilogy
Harvest
Viking
Baytex
Zargon
Paramount
Progress
Acclaim
Sequoia
Vault
Daylight
Starpoint
Advantage
Penn West
NAV
Esprit
Bonterra
ARC
Shiningbank
Bonavista
Primewest
Crescent Point
Freehold
Enerplus
Petrofund
Ketch
Pengrowth
NAL
Focus
Peyto
Enterra
-30.0
74.3
59.0
44.0
41.7
40.9
40.5
39.4
38.4
36.8
36.7
34.7
31.1
30.7
29.4
28.7
26.6
24.9
24.0
23.3
23.2
22.5
21.7
20.3
19.7
19.7
19.5
16.8
15.6
15.3
13.7
5.3
0.1
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
Unit price change plus distributions
from July through September 2005
Unit price change plus distributions
from July through November 2005
10
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
MANY HAPPY RETURNS
T
he median return from trust unit prices
and distributions during the third quarter
was an impressive 25.7%. In the subsequent
two months of October and November 2005,
the sector cooled off and unit prices pulled
back. Many people attributed the decline in
trust units to comments made by the Canadian
government regarding the taxation of trust
distributions. These comments no longer
stand, as the government decided to reduce
the taxation of dividends in order to level the
playing field for trusts and corporations.
The other major factor in fluctuating energy
trust unit prices was the market price of oil
and natural gas.
This chart does not include Thunder who started
trading after Q3 started.
70.0
80.0
TSX
symbol
Company
President
p12 Acclaim
Paul Charron
AE.UN
Advantage
Kelly Drader
AVN.UN
ARC
John Dielwart
AET.UN
Baytex
Raymond Chan
BTE.UN
Bonavista
Keith MacPhail
BNP.UN
Bonterra
George Fink
BNE.UN
p14 Crescent Point Scott Saxberg
CPG.UN
p16 Daylight
Fred Woods
DAY.UN
Enerplus
Gordon Kerr
ERF.UN
Enterra
Reg Greenslade
ENT.UN
Esprit
Stephen Savidant EEE.UN
Fairborne
Steven VanSickle
FEL.UN
Focus
Derek Evans
FET.UN
Freehold
David Sandmeyer
FRU.UN
Harvest
Jacob Roorda
HTE.UN
Ketch
Andy Mah
KER.UN
NAL
Andrew Wiswell
NAE.UN
NAV
Thomas Stan
NVG.UN
Paramount
Susan Riddell Rose PMT.UN
p18 Pengrowth
James Kinnear
PGF.B
Penn West
William Andrew
PWT.UN
Petrofund
Jeffery Errico
PTF.UN
Peyto
Don Gray
PEY.UN
Primewest
Donald Garner
PWI.UN
Progress
Michael Culbert
PGX.UN
Provident
Thomas Buchanan PVE.UN
Sequoia
Bradley Johnson
SQE.UN
Shiningbank
David Fitzpatrick
SHN.UN
Starpoint
Paul Colbourne
SPN.UN
Thunder
Douglas Dafoe
THY.UN
Trilogy
Jim Riddell
TET.UN
Vault
Robert Jepson
VNG.UN
Viking
John Zahary
VKR.UN
Zargon
Craig Hansen
ZAR.UN
MEDIANS
TOTALS
iQ Profile
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
11
Unit price
Nov 30
($)
18.68
20.80
25.19
16.85
35.00
22.40
20.95
12.98
53.50
23.60
12.40
16.10
24.87
17.90
35.20
10.80
18.01
9.00
21.90
21.35
34.40
20.60
26.10
33.98
16.80
12.98
18.75
29.00
22.31
12.40
25.54
10.30
8.80
30.40
Jul-Sep
unit
return
(%)
33.6
24.9
20.9
37.6
19.8
21.0
17.4
27.5
17.3
(1.5)
21.4
71.2
11.3
16.8
40.5
13.3
11.9
22.8
35.5
11.8
26.0
17.0
4.1
18.7
35.1
10.3
33.6
20.0
27.2
n/a
56.1
31.4
38.3
36.7
21.4
Jul-Nov
Q305
unit
total
return production
(%)
(boe/d)
21.8
40,227
22.6
20,006
26.3
55,592
25.0
34,774
12.8
50,579
11.6
3,629
13.4
12,530
29.8
14,424
14.3
79,406
(19.2)
8,284
3.9
16,759
49.1
11,321
15.1
10,036
11.9
8,973
30.1
37,549
(5.3)
12,724
26.4
19,710
12.2
7,997
27.3
26,567
16.0
58,894
18.7
99,802
5.6
37,485
(10.8)
22,646
10.8
40,121
28.9
17,481
1.2
33,768
19.6
6,485
34.6
21,252
18.4
35,126
n/a
11,575
42.6
24,404
(1.4)
8,350
24.3
25,358
21.3
8,036
18.4
20,629
921,868
Q305
Q305 end of
weighted
period basic
average basic
units
units
outstanding
including
including
exchangeables exchangeables
(000)
(000)
107,766
109,009
57,495
57,679
191,709
192,089
69,487
70,524
96,783
98,386
16,407
16,407
37,105
38,119
47,793
52,796
109,924
117,234
32,806
36,939
66,564
66,604
52,854
52,153
37,381
37,418
48,961
48,996
48,574
51,778
55,369
55,369
72,345
72,847
28,624
28,670
78,762
80,794
158,789
159,263
163,000
163,200
105,018
105,046
98,585
101,993
78,222
80,615
83,529
83,557
n/a
n/a
26,235
28,451
61,397
68,531
96,598
103,553
44,083
45,937
79,133
79,133
32,006
32,097
172,269
173,148
18,761
18,872
66,564
68,531
Q305
debentures
outstanding
($000)
24,896
130,488
0
82,695
104,576
0
0
22,117
0
0
97,254
0
0
0
60,800
65,908
0
59,543
87,486
0
0
0
0
2,500
91,159
n/a
0
0
75,029
0
0
51,111
72,178
0
1,027,740
Q305
net debt
excluding
debentures
($000)
316,364
264,359
363,799
402,858
375,571
10,920
119,110
139,531
768,334
127,560
165,161
127,564
94,252
96,344
376,039
129,444
214,508
60,682
182,518
534,004
835,700
232,422
207,255
381,800
94,956
n/a
116,861
226,747
400,500
149,046
244,711
84,673
297,285
19,830
8,160,708
1,291,315
1,024,721
Q305
distributions
Q305 capital
paid
Q305 expenditures
(cash flow distributions
(no acq. &
statement) declared per
disp.)
unit ($)
($000)
($000)
52,297
0.4875
39,247
43,015
0.7500
20,732
76,898
0.4900
83,047
30,241
0.4500
39,395
64,683
0.8250
53,231
9,506
0.6000
3,124
19,329
0.5300
12,315
16,274
0.3600
23,851
130,057
1.0900
92,900
16,918
0.4900
4,586
27,088
0.4200
25,484
15,017
0.3300
18,576
18,291
0.5200
5,657
21,543
0.4600
4,059
29,286
0.9500
33,600
21,594
0.3900
22,905
34,635
0.4800
28,961
8,473
0.3000
9,989
42,724
0.6800
3,882
109,455
0.6900
40,050
127,300
0.7800
95,800
50,150
0.4800
29,895
35,505
0.3600
93,001
61,600
0.9000
38,000
29,051
0.4200
24,868
n/a
n/a
n/a
12,083
0.4800
24,814
45,750
0.6900
24,690
61,534
0.6500
29,714
n/a
0.4500
n/a
37,984
0.5700
25,820
11,022
0.3450
10,124
24,564
0.2400
46,212
7,448
0.4600
16,192
Q305 cash
flow
($000)
92,697
55,575
168,117
67,501
140,249
12,209
33,275
43,601
194,231
16,622
45,143
35,406
29,773
38,893
103,508
34,491
63,546
20,501
74,726
158,976
334,900
111,122
77,179
106,400
53,215
n/a
16,731
67,721
101,400
35,037
68,170
21,436
70,445
21,854
2,514,650
Trusts Data Table
ON SEPTEMBER 19, 2005 ACCLAIM ENERGY TRUST AND STARPOINT ENERGY TRUST ANNOUNCED A PROPOSAL
TO MERGE AND FORM A NEW BENCHMARK ENERGY TRUST. THE TRANSACTION CREATES A TRUST WITH AN
ENTERPRISE VALUE OF APPROXIMATELY $5 BILLION, DIVERSIFIED PRODUCTION BASE OF 75,000 BOE/D, A PROVEN
PLUS PROBABLE RESERVE BASE OF OVER 220 MILLION BOE, AND AN RLI OF APPROXIMATELY NINE YEARS.
SUMMARY OF THE TRANSACTION
• Acclaim Energy Trust units will exchange for 0.833 each
• StarPoint Energy Trust units will exchange for 1.0 each
• Unitholders also receive common shares and warrants in an exciting new junior exploration and production company
to be called TriStar Oil & Gas Ltd.
• Initially, distributions will be set at $0.23 monthly beginning with the first distribution payable following the close of
the transaction
• Distribution increase represents an increase of 18% for Acclaim unitholders and 5% for StarPoint unitholders
• Canetic intends on applying to list on the New York Stock Exchange following closing of the transaction
HIGHLIGHTS OF THE MERGER
• Diversified production base weighted 65% towards light oil and 35% towards natural gas
• Complementary asset base with exposure to key areas of Western Canada
• Conservative balance sheet with proforma net debt of less than 1.0x cash flow
• Four year development drilling program, exceeding 1,000 drilling locations
• 80% operated production
• 2006 capital investment program of approximately $300 million, targeting up to 200 wells
• Payout ratio of approximately 60 percent with focus on sustainability
T O R E F L E C T T H E P O T E N T I A L T H I S N E W N A M E T R U S T H A S TA K E N O N A N E W N A M E .
+
12
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
=
DEVELOPMENT OPPORTUNITIES
RESERVES
500
The merger to form Canetic Resources Trust not only provides a
stable production base but as well gives the Trust access to long
term resource plays including
400
• Tight gas in B.C.
Canetic becomes the fourth largest energy trust by reserves with a RLI
of approximately 9 years based on proven plus probable basis.
Probable Reserves
Proven Reserves
300
• Coal bed methane
200
• Waterflood optimization
• Tertiary recovery methods
100
• Management of a portfolio of opportunities
0
Enerplus
Penn West
ARC
Canetic
Pengrowth
Petrofund
Bonavista
PrimeWest
Provident
Baytex
Peyto
StarPoint
Harvest
Ve r m i l i o n
Acclaim
Viking
Advantage
Esprit
Shiningbank
NAL
Tr i l o g y
Paramount
Progress
Crescent Point
Va u l t
Daylight
Focus
Ketch
Thunder
Tr u e
Fairborne
Freehold
Zargon
N AV
Sequoia
Bonterra
Enterra
• 900,000 net undeveloped acres
• Ability to consider acquisitions in other producing basins
including the U.S. and overseas
PRODUCTION
DISTRIBUTION & RETURN HISTORY
0.25
Distributions per unit ($CDN)
Since Inception
Current Monthly Distribution
Total 3 Year Total Return
0.20
100,000
$
7.91
$ 0.1625
189%
Canetic moves up to the third largest producer among energy trusts
based on production. Close to 40% of the reserve base is natural gas.
80,000
(November 15, 2002 to November 14, 2005)
3 Year Unit Price Low
3 Year Unit Price High
Current (as of November 24, 2005)
$
$
$
9.00
21.58
19.35
60,000
0.15
40,000
20,000
0.10
Penn West
Enerplus
Canetic
Pengrowth
ARC
Bonavista
Petrofund
Acclaim
PrimeWest
Harvest
Baytex
StarPoint
Provident
Paramount
Ve r m i l i o n
Viking
Tr i l o g y
Peyto
Shiningbank
Advantage
NAL
Progress
Esprit
Daylight
Crescent Point
Ketch
Tr u e
Thunder
Fairborne
Focus
Enterra
Va u l t
Freehold
Sequoia
Zargon
N AV
Bonterra
0
0.05
0.00
2002
2003
2004
2005
SCHEDULE OF TRANSACTION
November 21 – 28
December 16
December 19
January 5
January 9
Mailing of Information Circular
Deadline for receipt of Proxy
Meeting of Unitholders
Anticipated closing date
Anticipated TSX listing date of Canetic under symbol “CNE”
MANAGEMENT TEAM
F O R F U R T H E R I N F O R M AT I O N
J. Paul Charron, C.A. President and Chief Executive Officer
David Broshko, C.A. Vice President and CFO
Mark Fitzgerald, PEng, MBA Vice President, Operations
Murray Mason, PEng Vice President, Production, StarPoint Energy
Richard J. Tiede, PEng Vice President, Business Development
Wes Morningstar Vice President, Exploitation
Brian D. Evans, LLB Vice-President, General Counsel and Secretary
Keith Rockley Vice President, Human Resources and Corporate Administration
David Sterna Vice President, Corporate Planning and Marketing
Don Robson Vice President, Land
1900, 255 – 5th Avenue SW
Calgary, Alberta Canada T2P 3G6
toll-free: 1-877-539-6300
fax: 403-539-6499
website: acclaimtrust.com, spnenergy.com
Kerk Hilton Director, Investor Relations
direct: 403-539-6343
Unitholders may also contact
Kingsdale Shareholder Services
for assistance regarding submission of proxy forms.
toll-free: 1-866-639-8089
T R A D I N G S Y M B O L S Toronto Stock Exchange: AE.UN, SPN.UN
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
13
CORPORATE PROFILE • November 2005
S T R A T E G I C
TSX : CPG.UN
G R O W T H
Crescent Point Energy Trust is a conventional oil
and gas income trust with assets strategically
RECENT HIGHLIGHTS
focused and properties consisting of high
• On November 14, 2005, Crescent Point announced its third quarter results for 2005,
including an increase in cash flow from Q2 of 44%, net income increasing from $0.19
per unit to $0.28, and total production growth from 11,515 boe/d in Q2 to 12,530
boe/d in Q3.
quality, long life, operated, light oil and natural
• On October 3, 2005, Crescent Point announced a Plan of Arrangement to acquire
Bulldog Energy for approximately $118 million in Crescent Point trust units and
debt, and an additional Purchase and Sale Agreement to acquire land in southeast
Saskatchewan for approximately $25.5 million. Both transactions enhance production
and reserves in southeast Saskatchewan, one of the Trust’s core operating areas. If
completed, the transactions will enable Crescent Point to increase distributions to
$0.20 per month beginning from the December 15, 2005 payment.
Crescent Point uses an integrated approach
• On September 14, 2005, Crescent Point executed Agreements with three separate
companies to acquire assets with aggregate production of approximately 875 boe/d of
high quality, long life oil and natural gas in the Trust’s key operating area of southeast
Saskatchewan for total consideration of approximately $45.1 million. At the same
time, the Trust announced a distribution increase to $0.19 per unit, per month.
QUARTERLY HIGHLIGHTS
Q3 2005
Q2 2005
Q1 2005
Total revenue
72,336
54,489
48,316
Cash flow
33,275
22,978
20,108
0.88
0.66
0.64
10,506
6,534
(11.985)
0.28
0.19
(0.44)
(000s, except where indicated)
Per unit, diluted ($)
Net income (loss)
(1)
Per unit, diluted ($) (1)
Capital expenditures (including acquisitions)
73,298
79,619
29,518
119,110
112,934
119,977
Natural gas (mcf/d)
19,981
17,945
14,273
Oil & liquids (bbl/d)
9,200
8,524
8,404
12,530
11,515
10,783
Net debt
Production
Equivalent (boe/d)
(1) Net income (loss), net income (loss) per unit, and weighted average trust units outstanding
have been restated for the change in accounting policy for exchangeable shares in the second
quarter of 2005.
KEY STATISTICS
Trading Symbol:
Units Outstanding (fd):
Exchangeable Shares:
Total Units Outstanding:
November Monthly
Distribution:
Bank Line:
Projected Average Debt
2006:
Average 2006 Debt/Cash
Flow Ratio :
TSX - CPG.UN
43.7 mm
1.3 mm
45.0 mm
Production (2006 Forecast)
Oil & Liquids (bbls/d)
12,000
Gas (mcf/d)
18,000
Total (boe/d)
15,000
to grow through acquisitions, exploitation
and development of high-quality light oil and
natural gas reserves.
OFFICERS
• Scott Saxberg, BSc, PEng - President & CEO
• Greg Tisdale, BComm, CA - CFO
• Neil Smith, BASc, PEng - VP Engineering
& Business Development
• Dave Balutis, BSc - VP Geosciences
• Tamara MacDonald, BComm - Land Manager
• Ken Lamont, BComm, CA - Controller
and Treasurer
DIRECTORS
•
•
•
•
•
•
•
Peter Bannister - Chairman
Paul Colborne
Ken Cugnet
Hugh Gillard
Gerald Romanzin
Scott Saxberg
Gregory Turnbull
PARTNERS
• BANKER
Scotiabank, Calgary, AB
• AUDITOR
PricewaterhouseCoopers LLP, Calgary, AB
• LEGAL COUNSEL
McCarthy Tetrault, Calgary, AB
• EVALUATION ENGINEERS
GLJ Petroleum Consultants Ltd., Calgary, AB
• REGISTRAR AGENT
Olympia Trust Company, Calgary, AB
$0.20 per unit
Reserve Life Index
$230 mm
$160 mm
Proved
6.9 years
1.0 times
Proved Plus Probable
9.8 years
STRONG RESERVE BASE (Proforma with Bulldog Acquisition)
•
•
•
•
•
Strategically focused
Low risk, predictable production and reserve base
Operated (>90%)
High working interests (85%)
Large development inventory with more than 220 locations
(>9,000 boe/d risked production additions)
• Significant resource base
• original oil in place (OOIP) of over 800 million barrels
• only 15% recovered to date
14
gas reserves in Western Canada.
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
ANALYST COVERAGE
•
•
•
•
•
•
•
•
•
•
•
•
•
BMO Nesbitt Burns
Canaccord Capital
CIBC Wood Gundy
First Associates Investments
First Energy Capital
GMP Securities
Haywood Securities
National Bank Financial
Raymond James & Associates
Royal Bank of Canada
Scotia Capital
Sprott Securities
Tristone Capital
CORPORATE PROFILE • November 2005
Production Growth
SIGNIFICANT RESOURCE BASE
(boe/d)
Crescent Point focuses its attention on pools of reserves with large amounts of original
oil in place (OOIP). The Trust’s reserves include OOIP of over 800 million barrels. About
15 percent has been recovered to date.
As a result of the Trust’s activities in 2005, Crescent Point has added an estimated 14.6
mmboe proved and 21.4 mmboe proved plus probable reserves, and increased reserve
life indices to 6.9 years proven and 9.8 years proven plus probable. The Trust exited 2004
with 25.7 mmboe proven and 34.3 mmboe proven plus probable reserves and reserve life
indices of 6.8 years proved and 9.1 years proved plus probable.
15,000
15,000
12,000
12,000
9,604
9000
5,659
6000
3000
FOCUS AREAS
1,974
86
0
2001
2002
2003
2004
2005
2006
(1)
(2)
1) 2005 Forecast Average Production Rate
2) 2006 Forecast Average Production Rate
Reserves Growth
(mmboe)
60
53.6
50
37.7
40
34.3
30
24.1
25.7
18.4
20
10.8
9.1
10
1.1 1.3
0
2001
2002
Total Proved
OIL HEDGES
HEDGING STRATEGY
5,000
$80
4,500
amount hedged (bbl/d)
$70
3,500
3,000
$60
2,500
2,000
1,500
$50
1,000
500
Average Hedge Price (C$/bbl)
4,000
• Provide greater stability
to distributions
2003
2004
Total Proved Plus Probable
1. CPG reserves evaluated by GLJ Petroleum
Consultants Ltd. effective January 1, 2005
plus internal estimates of 2005 year
to date acquisitions.
Cash Flow Growth
($mm)
160.0
160
• Hedge up to 50 percent
of after-Crown royalty
volumes
2005(f)1
140
120
108.0
• Hedge up to 36 month
periods
100
80
69.8
$40
0
Q4
05
Q1
06
Q2
06
Q3
06
Q4
06
Q1
07
Q2
07
Average Hedge Price (C$/bbl)
Q3
07
Q4
07
Q1
08
Q2
08
amount hedged
Q3
08
60
20
CONTACT INFORMATION
Suite 3500, 150- 6th Avenue SW
Calgary, Alberta Canada T2P 3Y7
36.6
40
11.9
0
2002
2003
2004
2005(f)
2006(f)
Estimate US $55.00 WTI/bbl; $9.00/GJ AECO and
$0.85 US Exchange Rate
tel 403.693.0020
fax 403.693.0070
[email protected]
www.crescentpointenergy.com
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
15
CORPORATE PROFILE
November 30, 2005
TSX Listing
Units Outstanding with Exchangeables
Unit Price Trading Range
Convertible Deb
DAY.DB 8.5% - $9.50
Enterprise Value (Approximate)
2006 Forecasted Production (boe/d) 60% gas
2006 Forecasted Cash flow (MM)*
per unit
Monthly Distribution - per unit (payout - 55%)
2006 Forecasted Capital Budget
Daylight Energy Trust is an actively-managed, opportunity rich trust, focused in the high potential multi-zone
areas of West Central Alberta and the Peace River Arch. Daylight seeks to leverage its competitive advantage
from a proven combination of high-end technical expertise and business execution skills to deliver the
maximum value from its high quality property base. Daylight has an extensive multi-year inventory of low risk
development and large scale exploitation opportunities combined with a large undeveloped land base. Daylight
will pursue selective acquisitions that meet our rigorous evaluation criteria for value and value creation.
Daylight Energy Trust is a natural gas weighted medium sized conventional royalty trust, anticipating to
produce 16,750 - 17,250 boe per day in 2006, with headquarters in Calgary, Alberta. The Trust was formed
through Midnight Oil & Gas Ltd’s acquisition of Vintage Petroleum Canada, Inc. and the subsequent
reorganization into Daylight Energy Trust and Midnight Oil Exploration Ltd. Daylight trust units commenced
trading on the Toronto Stock Exchange on December 2, 2004 under the symbol DAY.UN with an 8.5%
convertible debenture trading under the symbol DAY.DB.
DAY.UN
63.0MM
$9.15 - $13.20
$13.5MM
$950MM - $1,000MM
16,750 - 17,250
± $190MM
$2.88
$0.14
$90MM
* Based on commodity prices: WTI US$55.00/bbl, AECO C$9.50/mcf, US$/C$0.85
DAYLI G HT’S P E R FO R MAN C E S I N C E I N C E PTI O N
PRODUCTION (BOE/D)
OPERATING COSTS
($/BOE)
13,200
13,400
14,600
14,400
$10.57
$10.20
$9.89
$9.78
Q4/04
Q1/05
Q2/05
Q3/05
Q4/04
Q1/05
Q2/05
Q3/05
$22.50
$25.56
$26.97
$36.86
Q4/04
Q1/05
Q2/05
Q3/05
RESERVE LIFE INDEX
(YEARS)
RESERVES
(MMBOE)
CONSISTENT 2005 DISTRIBUTIONS ($/unit)
NETBACKS
($/BOE)
Jan 05
Feb 05
Mar 05
Apr 05
May 05
Jun 05
Jul 05
Aug 05
Sep 05
Oct 05
Nov 05
Dec 05
12 ¢
12 ¢
12 ¢
12 ¢
12 ¢
12 ¢
12 ¢
12 ¢
12 ¢
14 ¢
14 ¢
14 ¢
2005 TOTAL RETURN = UNIT PRICE + DISTRIBUTION REINVESTED
45%
October 31, 2005
35%
UNDEVELOPED LAND
(000 NET ACRES)
25%
15%
515*
30.8
31.3
44.2
43.7
6.4
Q4/04
Q1/05
Q2/05
Q3/05
Q4/04
6.4
Q1/05
8.2
Q2/05
8.2
Q3/05
419
417
430
411
Q4/04
Q1/05
Q2/05
Q3/05
5%
-5%
JAN 05
FEB 05
DAY.UN
MAR 05
Peer Group
APR 05
MAY 05
S&P/TSX
JUN 05
JUL 05
S&P 500
AUG 05
SEP 05
OCT 05
SOURCE: Bloomberg and CIBC World Markets Inc.
* post-closing, Tempest Energy Arrangement
1ST YEAR H I G H LI G HTS – C R EATI N G VALU E
Strategic acquisitions – Add reserves, production and opportunities at low cost
✷ Tempest acquisition – creative deal structure maximizes value
✷ Wildmere acquisition – well timed, well priced, expands development portfolio
Reduced operating costs – Ongoing optimization and efficiency program
✷ Reduced operating costs from $12.50 to $9.78 targeting $9.50 per boe
Expanded opportunity base – Increased capital program
✷ Multi-year drilling inventory (260-290 locations)
Excellent 2005 drilling results – 100% drilling success
✷ 26 gas wells, 11 oil wells – 37/37
Increased reserves per unit and Reserve Life Index (RLI) – Proved and probable
✷ Increased reserves per unit by 31%
✷ RLI from 6.5 years to 8.2 years with 49 million boe
Increased production per unit – Acquisition and exploitation
✷ Increased production per unit by 6%
✷ From 13,200 boe/d (2004) to 16,750 – 17,250 boe/d (2006)
Increased distribution per unit – Reduced payout percentage
✷ Increased cash distribution from $0.12 to $0.14 per month (2005)
✷ Reduces payout percentage from 70% (2004) to 50% (DEC-05)
✷ Distributed Open Range Common Shares and Arrangement Warrants, a
newly created public junior exploration company (NOV-05)
CO R E P R O P E RTI E S – H I G H Q UALIT Y, H I G H POTE NTIAL A S S E TS
Peace River Arch/Deep Basin
- multi-zone, high potential
✷ ± 4,200 boe/d
✷ 71,000 net undeveloped acres
West Central Area
Focused in high potential multi-zone areas
✷ Large liquid rich deep natural gas reserves - “Deep Basin” type gas trap
✷ Large high potential oil properties
✷ Large exploitable and previously under funded prospect inventory
Barriers to entry reduce competition
- large under developed opportunities ✷ Technically challenging/high cost drilling areas
✷ Access to land and processing facilities
✷ ± 5,300 boe/d
✷ 142,400 net undeveloped acres Tremendous upside to unlock
✷ Operating cost reduction
East 5 Area
✷ Development/exploitation reserve adds
- solid, low risk development
✷ Large undeveloped land inventory
✷ ± 7,500 boe/d
✷ 300,900 net undeveloped acres
Large prospect inventory
✷ In-house geological/geophysical database
✷ Multi-year development/exploitation program
w w w. d ay l i g h t e n e r g y. c a
16
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
F I NAN C IAL
CORPORATE INFORMATION
(in thousands of dollars, except unit, per unit and boe data)
THREE MONTHS ENDED
Petroleum and natural gas revenues
Royalties
Realized on commodity derivative
Operating expenses
Transportation
Operating netback
General and administrative – cash charge
Cash financial charges
Cash taxes
Asset retirement expenditures
Cash flow from operations
Per unit
– Basic
– Diluted
Net income
Per unit
– Basic
– Diluted
Distributions declared
Per unit
Payout ratio
Capital expenditures
Corporate acquisitions
Wells drilled - gross (net)
Bank debt
Working capital deficiency
Total assets
Units outstanding (000s)
Basic including exchangeable shares
Diluted
OFFICERS
September 30, 2005
$
76,445
(13,188)
(350)
(12,981)
(1,018)
48,908
(2,216)
(2,756)
(224)
(111)
43,601
0.91
0.81
20,525
0.45
0.42
17,022
0.36
39%
23,851
15 (6.9)
124,185
16,467
689,297
June 30, 2005
$ 60,529
(10,506)
59
(13,184)
(950)
35,948
(2,108)
(2,861)
(347)
(782)
29,850
0.63
0.57
12,201
0.27
0.26
16,283
0.36
55%
14,086
63,549
5 (3.4)
131,755
11,602
676,212
March 31, 2005
$ 53,984
(10,340)
(12,328)
(430)
30,886
(1,987)
(2,584)
(244)
(788)
25,283
0.58
0.51
5,887
0.14
0.14
14,962
0.36
59%
14,387
17 (8.6)
101,850
12,256
610,970
52,796
56,460
47,253
56,209
43,975
52,594
Executive Chairman
Anthony Lambert
President and Chief Executive Officer
Steve Nielsen
Vice President, Finance and
Chief Financial Officer
Randy Ford
Vice President, Operations
Brent Eshleman
Vice President, Engineering and Exploitation
Dale Mennis
Vice President, Business Development
Steve Horner
Vice President, Business Services
Chris von Vegesack
Corporate Secretary, Burnet,
Duckworth & Palmer
DIRECTORS
Fred Woods
President & CEO, Midnight Oil Exploration Ltd.
Anthony Lambert
President & CEO, Daylight Energy
Peter Harrison
Senior Vice President, Canadian Equities,
Montrusco Bolton
Rick Orman
Chairman & CEO, Runnymede Resources Inc.
Jeff Tonken
President & CEO, Birchcliff Energy Ltd.
BANKERS
Canadian Imperial Bank of Commerce
The Bank of Nova Scotia
SOLICITOR
O P E R ATI O N S
Average daily production
Natural gas (mcf/d)
Light oil (bbls/d)
Heavy oil (bbls/d)
Natural Gas Liquids (“NGLs”) (bbls/d)
Oil & NGLs (bbls/d)
Combined (boe/d)
Average prices received
Natural gas ($/mcf)
Light oil ($/bbl)
Heavy oil ($/bbl)
NGLs ($/bbl)
Oil & NGLs ($/bbl)
Combined all products ($/boe)
Fred Woods
Burnet Duckworth & Palmer LLP
54,096
2,527
2,096
785
5,408
14,424
$
$
$
9.26
68.98
51.94
56.56
60.57
57.61
57,890
2,292
1,937
771
5,000
14,648
$
$
$
7.51
62.80
23.49
52.71
46.02
45.41
58,875
2,721
892
3,613
13,426
$
$
$
6.86
56.49
46.35
53.99
44.68
AUDITOR
KPMG LLP, Chartered Accountants
EVALUATION ENGINEERS
Gilbert Laustsen Jung Associates Ltd.
REGISTRAR AND TRANSFER AGENT
Valiant Trust Company
ANALYST COVERAGE
Canaccord Capital
GMP Securities Ltd.
CIBC World Markets
FirstEnergy Capital Corp.
Scotia Capital
Sprott Securities Inc.
Salman Partners Inc.
HEAD OFFICE
Sun Life Plaza, West Tower
Suite 2100, 144 – 4th Avenue SW
Calgary, Alberta T2P 3N4
Tel: 403-266-6900 Fax: 403-266-6988
INVESTOR RELATIONS CONTACT:
Scott Daniel, Manager, Investor Relations and Treasury
E-mail: [email protected]
Tel:
403 218-6885
Toll Free: 1-877-266-6901
w w w. d ay l i g h t e n e r g y. c a
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
17
SIXTEEN
SIXTEEN YEARS
YEARS OF
OF PROVIDING
PROVIDING SUPERIOR
SUPERIOR RETURNS
RETURNS TO
TO INVESTORS
INVESTORS
CANADIAN
CANADIAN CURRENCY
CURRENCY
Principal Properties
Bathurst
Western Canada
Core Area
Edmonton
Core Area
Quirk Creek
Enchant
Monogram
Vancouver
Calgary
Calgary
Peace
Peace River
River Arch
Arch
Deep
Deep Basin
Basin
Greater
Greater McLeod
McLeod
Lindbergh
Lindbergh
Tangleflags
Tangleflags
Twining
Twining // Three
Three Hills
Hills
Southern
Southern Heavy
Heavy Oil
Oil
Countess
Countess
Princess
Princess
Through the purchase of trust units, unitholders participate in the
ownership of a large portfolio of crude oil and natural gas properties,
HIGHLIGHTS
x
x
x
x
AVERAGE PRODUCTION MIX
35% Oil
10% Heavy Oil
10% NGLs
45% Gas
Balanced
Production
Profile
OIL & GAS RESERVES
Oil & NGLs
Natural Gas
210.5 214.8
Heavy Oil
166.5 160.3
176.6 183.0
218.6
184.4
1992 - 2004
Compound
Annual Growth Rate
35%
SOEP
New
Hampshire
Portsmouth
Sable
Sable Offshore
Offshore Energy
Energy Project
Project
Dracut
Boston
East Coast Canada
receiving the net cash flow ( after expenses ), paid monthly, as
the oil and gas reserves are produced.
Continuing acquisitions and development of existing properties
replenish and add to the reserve base.
Pengrowth does not engage in high-risk exploration and seeks to
acquire long-life assets with low decline rates and high
development potential to achieve more stable production.
x
x
x
x
x
x
x
x
x
x
x
One of North America's Largest Oil & Gas Trusts
Equity Market Capitalization:
C$ 3.9 billion
Total Enterprise Value:
C$ 4.4 billion
Stock Symbol TSX / NYSE :
PGF.B - PGF.A / PGH
Recent Trading Price (PGF.B - TSX):
C$21.35
52-Week Range (PGF.B):
C$ 16.10 – 21.75
Trailing Cash-on-Cash Yield (PGF.B):
13.0%
Eligibility in Canada:
RRSPs, RRIFs, DPSPs, RESPs
Average Daily Trading Volume PGF.B - TSX: ( YTD ) 360,907 units
Average Daily Trading Volume PGH - NYSE: ( YTD ) 548,119 units
Employees:
289
Oil
Heavy Oil
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
5 8 ,8 9 4
5 3 ,7 0 2
3 3 ,5 8 1
3 1,8 2 1
2 9 ,7 4 1
43%
18 ,14 0
22.3
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Natural Gas @ 6:1
Natural Gas
4 9 ,0 3 3
4 3 ,7 8 5
4 0 ,3 2 0
1992 - 2004
Compound
Annual Growth Rate
57.4
CAGR 1999 - 2004 5.5%
NGLs
( boe / day )
41.8
18
Halifax
Nova
Scotia
Bangor
AVERAGE DAILY PRODUCTION
( Established mmboe )
10.8
Sable Is.
CORPORATE PROFILE
16 years of success
x Geographically diversified asset base
10.4 year reserve life index x Average cash-on-cash yield of 14%
over 10 years
Strong balance sheet
x Opportunity for future growth
High quality assets
5.9
Saint
John
Weyburn
Headquartered in Calgary, Alberta, Canada, Pengrowth Energy Trust
is one of the largest energy royalty trusts in North America. Trust
units trade on the Toronto Stock Exchange ( PGF.B / PGF.A ) and
the New York Stock Exchange ( PGH ). Pengrowth has provided
investors with superior returns and growth in value for 16 years.
Sydney
Glace
Bay
Goldboro
Prince
Edward Island
Charlottetown
Fredericton
Maine
Mass.
Core Area
New
Brunswick
Maritimes &
Northeast Pipeline
Murphy
Murphy Acquisition
Acquisition Properties
Properties
Bulrush
Bullrush
Rigel
Squirrel
Oak
Dunvegan
Nipisi
Tupper
Goose River
Swan
SwanHills
Hills
Judy
Judy Creek
Creek
McLeod River
River
McLeod
DECEMBER
DECEMBER 2005
2005
7 6 6 1,4 6 1
4 ,5 6 1
11,8 6 2
6 ,8 7 7
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Q305
Natural Gas @ 6:1
CAGR 1999 - 2004 14.0%
PRODUCTION PROFILE
PRODUCTION & RESERVES BY PROPERTY
60
SOEP
Murphy
40
B.C. Assets Oct 2002
30
SOEP Gas June 2001
12%
Judy Creek Oct 1997
16%
20
Reserves*
Production
( mboe /d )
50
June 2004
Judy Creek
22%
18%
8%
20%
Other
Properties
32%
Base Properties
23%
10%
BC Properties
39%
10
Murphy Properties
0
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Approximately 55% of production is operated by Pengrowth
2005
RELATIVE PERFORMANCE OF A $100 INVESTMENT
PENGROWTH PERFORMANCE VS. TSX INDICES
$2,000
$1,200
$1,961
( C$ )
$1,500
Pengrowth
S&P / TSX Comp TR
S&P / TSX O&G E&P
$1,000
$1,000 ( C$ )
$735
$455
$0
$600
$296
$200
$0
To October 31, 2005
2001
2002
2003
2004
Q3-2005
Total Debt
345.5
316.5
304.3
384.6
457.2
1,174.0
1,389.7
1,463.7
1,846.8
1,924.9
204.8
228.9
346.6
404.1
521.5
1.7
1.4
0.9
1.0
0.87
0.29
0.23
0.21
0.21
0.24
Trailing 12 month
Cash Flow
Debt/Trailing Cash Flow
Total Debt/Total Capitalization*
ANNUAL & CUMULATIVE DISTRIBUTIONS SINCE INCEPTION
Cumulative
Jan-00
Jan-02
Jan-04
Jan-06
(%)
10 Year Average Yield 18.3% 21.4% 17.3%
14.4%
13.8% 15.1% 14.3%
10.4% 11.5% 10.8% 10.8%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
MONTHLY DISTRIBUTIONS TO UNITHOLDERS
Annual
( C$ millions )
Jan-98
Based on Distributable Income / trust unit divided by the average of high and low trading prices during the year
* Book capitalization ( equity plus Long-term debt )
$2,000
Jan-96
PENGROWTH AVERAGE CASH-ON-CASH YIELD
(C$ millions)
Total Capitalization*
Jan-94
To October 31, 2005
CAPITAL STRUCTURE
$2.01 Billion
in Distributions
Since inception, the Trust has
paid out $31.03 per trust unit
$800
$400
$538
$400
Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07
$1,200
$999
Pengrowth
S&P / TSX Comp TR
S&P / TSX O&G E&P
$800
$500
$1,600
*Proved + Probable
Annual
Cumulative
$0
$500
$ 0.50
$400
$ 0.40
$300
$200
( C$ )
$ 0.30
$ 0.20
$100
$ 0.10
$0
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Includes December 15, 2005 distribution
$ 0.00
1998
1999
2000
2001
2002
Includes December 15, 2005 distribution
2003
2004
2005
MANAGEMENT TEAM
GOALS & OBJECTIVES
James S. Kinnear, Chairman, President & CEO
Christopher Webster, Chief Financial Officer
Jim Causgrove, Vice President, Production and Operations
Bill Christensen, Vice-President, Strategic Planning and Reservoir Exploitation
Charles V. Selby, Vice-President & Corporate Secretary
Larry Strong, Vice-President, Geosciences
Gordon M. Anderson, Vice-President
Doug C. Bowles, Controller
Jim MacDonald, Director of East Coast Operations
Pengrowth's goal is to increase
distributable income per trust unit
over time by maintaining a high
quality asset base.
Head Office - Suite 2900, BP Centre - 240 Fourth Avenue S.W., Calgary, Alberta, Canada T2P 4H4
Investor Relations, Calgary · Telephone (403) 233-0224 · Fax (403) 294-0051 · Toll Free 1-800-223-4122
Investor Relations, Toronto · Telephone (416) 362-1748 · Fax (416) 362-8191 · Toll Free 1-888-744-1111
E-mail: investorrelations @ pengrowth.com · Website: http://www.pengrowth.com
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
19
WE’VE GOT A LOT
OF DEMONSTRATED
RESOURCES.
CNX Marketlink offers simultaneous news release distribution, seamless
regulatory filing, custom created investor relations websites and webcasts,
conference calling and much more. In fact, CNX Marketlink is the only suite
of investor relations solutions endorsed by TSX Group®. We’re the ultimate
resource for all IR professionals.
Visit cnxmarketlink.com or call 1.800.413.2638 for more information.
CNX Marketlink is a trademark of CNW Group. TSX® and TSX GROUP®, are trademarks of TSX Inc. Used under license.
20
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
OIL & GAS DISCLOSURE TRENDS
The CNX Marketlink Disclosure Report is an
analysis of the financial reporting practices of the
224 companies on the S&P/TSX Index, the Trust
Indices, as well as the universe of Canadian public
companies. The analysis identifies criteria deemed
most important for inclusion within the quarterly
earnings news release and uses it to benchmark
corporate disclosure. Guidelines for best practice
suggest that the quarterly earnings news release
includes three financial statements (Balance Sheet,
Income Statement and Cash Flow Statement), Notes
to the financial statements and a Management
Discussion and Analysis. Platinum Disclosure
identifies those companies which report at this
highest level of disclosure.
Preliminary third quarter analysis supports the
trend towards greater and more comprehensive
information disclosure. Canadian Oil and Gas
companies have led the way in reporting quality.
In Q3 of 2005, 87% of the Energy Trust Index, 69%
of the Energy Sector and 57% of the Junior Oil and
Gas grouping included a Management Discussion
and Analysis within the quarterly earnings news
release, as compared to 47% of the S&P/TSX Index,
and 35% of the Small Cap Index.
96% of the Energy Trust Index, 84% of the Energy
Sector and 73% of the Junior Oil and Gas grouping
included all three financial statements within the
quarterly earnings news release, as compared to
82% of the S&P/TSX Index, and 77% of the Small
Cap Index
S & P TSX
EnergyTrust
Energy Sector
Juniors Oil
and Gas
S&P TSX
SmallCap
Index
S & P TSX
Index
Balance Sheet
96%
86%
72%
82%
84%
Income Statement
96%
86%
72%
82%
87%
Cash Flow Statement
96%
83%
72%
76%
81%
MD & A
87%
69%
57%
35%
47%
Notes
87%
77%
67%
44%
58%
Segmented Reporting
35%
54%
4%
50%
61%
Stock Based
Compensation
78%
74%
72%
68%
69%
US Dollar
0%
6%
0%
36%
35%
US GAAP
0%
3%
1%
1%
7%
Cdn and US GAAP
0%
3%
1%
1%
3%
Disclaimer
100%
100%
96%
99%
97%
Platinum Disclosure
87%
69%
57%
31%
44%
Gold Disclosure
0%
9%
10%
17%
17%
Silver Disclosure
9%
6%
6%
29%
21%
Disclosure Criteria
Platinum Disclosure identifies those companies
which report at the highest level of disclosure. From
the table below, one can see that the Canadian
Oil and Gas companies have outperformed the
Composite Index on this metric also.
Legend:
Platinum Disclosure - 3 Financials, Notes and MD&A
Gold Disclosure – 3 Financials, Notes
Silver Disclosure – 3 Financials
To learn more about the CNX Marketlink Disclosure Analysis Report,
or for your personalized analysis, please contact: CNW Group,
Eva Spanoyannis, (416) 863-5717, [email protected]
we’re
refreshed
for
annual report
season
w ww. i ra de sso . c o m
T - 403.503.0144
... give us a call
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
21
JUNIORS AND TRUSTS ENTRANCES AND EXITS
NEW TO THIS REPORT
The following is a list of companies that either didn’t exist, weren’t big enough,
had quarters that didn’t reconcile or were simply overlooked for our last iQ Report.
JUNIORS
Alberta Clipper
TRUSTS
nil
Anderson
Chamaelo Exploration
Drilcorp
Dual
E4
Fairquest
Rockyview
Sawtooth
Valiant
Welton
Zenas
DEALS ANNOUNCED, BUT NOT CLOSED
As of the writing of this report, the following deals had been announced, but
are yet to close. This will likely be the last iQ Report for the companies listed below.
Mission to acquire Bison
Starpoint Energy Trust and Acclaim Energy Trust to merge and form
Canetic Resources Trust and spin off TriStar Oil & Gas
Viking Energy Trust and Harvest Energy Trust to merge and continue as Harvest Energy Trust
RockyView to acquire Espoir
Bear Ridge to acquire Veteran
DONE DEALS
The following deals have closed since our previous iQ Report, meaning
certain companies affected are not included in this report.
Purcell reorganized into Point North and spun out Tenergy
Crescent Point acquired Bulldog and spun out Bulldog
Daylight acquired Tempest and spun out Open Range
Shiningbank acquired Blizzard and spun out Zenas
True Energy merged with TKE Energy Trust to form True Energy Trust and spun out Vero Energy
22
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
JUNIOR OIL & GAS
COMPANY
COMPARISON
INCLUSION CRITERIA
Primary business must be oil and gas exploration, development and production
Q3 2005 production must fall between 500 and 15,000 boe/d
Majority of production must be from Western Canada
Must be publicly traded on the TSX or TSX Venture Exchange
24
Juni or Compar i so n C h a r ts
38
J u n io r P rofi le s
24
25
26
27
28
29
30
31
32
33
34
35
36
Q3 Production (boe/d)
Q3 Production Mix - Natural Gas Weighting (%)
Change in Production Q2 2005 to Q3 2005 (%)
Change in Production per Share
Enterprise Value Versus Q3 Production ($ per boe/d)
Q3 Cash Flow Netback ($/boe)
Q3 Operating Expenses ($/boe)
Q3 General and Administrative Expenses ($/boe)
Q3 Depletion, Depreciation and Amortization Expenses ($/boe)
Annualized Q3 Cash Flow Multiples
Net Debt to Annualized Cash Flow
Q3 Share Price Change
Juniors Data Table
38
40
42
44
46
48
50
52
54
56
58
Burmis Energy
Delphi Energy
Diamond Tree Energy
Diaz Resources
Galleon Energy
Great Plains Exploration
Innova Exploration
Rival Energy
Titan Exploration
Valiant Energy
Zapata Energy
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
23
junior COM PA RIS O N
Q3 Production (boe/d)
Real
Duvernay
NuVista
Highpine
BlackRock
Galleon
Rider
Cyries
Kereco
Celtic
Birchcliff
Delphi
Crew
Clear
Atlas
Petrobank
Endev
Prairie Schooner
ProEx
Storm
Gentry
Kick
Find
Iteration
Zapata
Luke
Cdn Superior
Innova
Diamond Tree
Blue Mtn
Anderson
Terra
Grey Wolf
Grand
GEOCAN
Berens
ProspEx
Titan
Exalta
Burmis
Bison
Hawk
Mission
Great Plains
Arsenal
Caribou
Peregrine
Cordero
Veteran
Choice
Masters
Rock
Can Southern
Cinch
SignalEnergy
Breaker
Accrete
Diaz
RSX
West
Stylus
Midnight
Fairquest
Chamaelo
Capitol
Rockyview
Grand Banks
Raven
Rival
Canex
WranglerWest
Espoir
Alberta Clipper
Bear Ridge
AltaCanada
Valiant
Tiverton
Dual
Sawtooth
Twoco
E4
Tusk
Pilot
C1
Drilcorp
Zenas
Welton
10,710
10,212
9,874
8,608
8,414
8,064
7,898
5,525
5,197
5,081
4,626
4,152
4,093
3,995
3,758
3,538
3,376
3,314
3,214
3,208
3,154
3,093
3,053
2,832
2,779
2,756
2,705
2,575
2,565
2,341
2,249
2,195
2,181
2,095
2,012
1,970
1,963
1,861
1,845
1,839
1,702
1,656
1,600
1,591
1,563
1,479
1,434
1,421
1,398
1,371
1,348
1,343
1,285
1,262
1,240
1,204
1,202
1,152
1,146
1,143
1,126
1,084
1,056
1,052
1,039
1,029
1,020
1,012
914
904
870
816
806
784
678
668
659
642
633
624
624
623
611
571
541
537
504
0
24
2,000
4,000
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
A
SIZING UP THE COMPETITION
lthough we include companies with production
up to 15,000 boe/d, our comparison of
juniors is often weighted towards smaller juniors
as there are many more of them. When junior
companies get larger they are often acquired or
converted to trusts.
6,000
The following table shows how the distribution
of juniors in this report is skewed towards
smaller production levels. It also shows that
there are more juniors included in this report
than either of the previous two reports.
Production Range
500 to 1,500 boe/d
1,501 to 2,500 boe/d
2,501 to 3,500 boe/d
3,501 to 4,500 boe/d
4,501 to 5,500 boe/d
5,501 to 6,500 boe/d
6,501 to 7,500 boe/d
more than 7,500 boe/d
total
8,000
10,000
Number of Companies
Q1
Q2
Q3
34
34
42
16
15
16
15
11
13
9
8
5
1
2
3
1
1
1
2
1
0
5
5
7
83
77
87
12,000
junior
C O M PA R IS O N
Q3 Production Mix — Natural Gas Weighting (%)
Median = 62%
100
100
98
Cordero
Twoco
Can Southern
Prairie Schooner
Choice
ProspEx
Luke
Iteration
Espoir
Rockyview
Berens
ProEx
Fairquest
Anderson
Stylus
AltaCanada
Endev
Diaz
Crew
Cinch
SignalEnergy
Birchcliff
Storm
Duvernay
Grey Wolf
Delphi
Exalta
Cyries
Grand Banks
Rider
Cdn Superior
NuVista
Clear
Midnight
Rock
Raven
Terra
Atlas
Blue Mtn
Veteran
Find
Great Plains
Alberta Clipper
Burmis
Drilcorp
Accrete
Chamaelo
Innova
Hawk
Welton
Breaker
E4
Bear Ridge
Sawtooth
Gentry
Galleon
Diamond Tree
Petrobank
Caribou
C1
Rival
Real
WranglerWest
Zapata
Peregrine
Masters
Kereco
Tusk
Celtic
Kick
Tiverton
Zenas
Dual
Canex
Valiant
Grand
Highpine
RSX
Mission
Titan
Capitol
West
GEOCAN
Arsenal
Pilot
Bison
BlackRock
95
94
93
93
93
93
93
92
89
89
89
87
85
84
84
83
82
80
80
80
79
79
79
78
78
78
77
76
76
75
75
74
73
72
70
69
67
63
63
63
62
62
62
62
61
61
60
60
60
59
59
59
57
56
JUNIORS LEAN TO NATURAL GAS
54
53
52
51
51
49
49
48
48
47
47
44
43
43
42
41
39
39
38
35
35
28
25
22
22
T
he junior sector offers investors the
opportunity to invest in companies
that range from 100 percent oil and
liquids production to 100 percent
natural gas production. Unless you
are more bullish on one commodity
versus the other, the production mix
doesn’t measure the degree of success
a company will have.
The juniors’ median weighting to natural
gas is 62 percent this quarter, lower than
the 68 percent reported last quarter.
By comparison, the conventional trusts
have a median weighted of 57 percent
to natural gas, which didn’t change
from the previous quarter.
13
6
6
0
-
20
40
60
80
100
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
120
25
junior COM PA RIS O N
Change in Production — Q2 2005 to Q3 2005 (%)
Median = 9%
-50
26
217
100
96
93
89
80
76
61
50
44
43
41
38
37
35
34
33
31
29
29
28
27
25
25
25
24
22
20
16
15
14
13
13
12
12
11
10
10
9
9
6
4
4
3
3
3
2
2
2
2
1
1
1
1
1
0
0
I
-0
-0
-1
-1
-2
-3
-3
-5
-6
-6
-7
-7
-8
-8
-9
-12
-13
-14
-20
-26
MOVING IN THE
RIGHT DIRECTION
Birchcliff
Cyries
Titan
Rock
Highpine
Accrete
Great Plains
Grand
Veteran
Tusk
Galleon
Sawtooth
Diamond Tree
Breaker
Celtic
Arsenal
Luke
Kereco
Cordero
ProEx
Innova
NuVista
Canex
GEOCAN
Capitol
Prairie Schooner
SignalEnergy
Mission
Rival
Exalta
West
Bison
Rider
Petrobank
Iteration
Drilcorp
Cdn Superior
Clear
Can Southern
Masters
Twoco
Burmis
Gentry
ProspEx
Berens
Pilot
Grey Wolf
Duvernay
WranglerWest
Choice
BlackRock
Peregrine
AltaCanada
Real
Stylus
Hawk
Caribou
Cinch
RSX
Delphi
Diaz
Kick
Bear Ridge
Crew
Atlas
Raven
Midnight
Tiverton
Zapata
Terra
Storm
Grand Banks
Endev
Find
Blue Mtn
Espoir
C1
-
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
50
100
150
nvestors look to junior oil and gas
companies for growth, whereas they
traditionally look to energy trusts for
stability. Growth in juniors is ideally
measured on a per share basis, so
we have included the graph on the
following page.
When reading this chart, one should keep
in mind that production levels may have
been influenced by one-time events. The
story could already be different and it is
important to refer to company materials
for the latest trends.
200
250
junior
C O M PA R IS O N
Change in Production Per Share — Q2 2005 to Q3 2005 (%)
Median = 3%
-60
83
61
53
44
43
43
37
36
34
33
33
32
31
30
27
24
24
22
20
17
16
15
13
13
12
12
11
10
10
10
9
9
8
8
5
4
3
3
3
2
2
2
1
1
0
-0
-1
-1
-1
-1
-1
-2
-2
-2
-2
-3
-3
-4
-5
-6
-6
-6
-8
-8
-10
-10
-10
-11
-11
-11
-12
-13
-13
-15
-18
T
SPECTACULAR GROWTH
Birchcliff
Accrete
Titan
Tusk
Cyries
Veteran
Diamond Tree
Sawtooth
Grand
Highpine
Luke
Celtic
Galleon
Rock
Breaker
Canex
Capitol
Prairie Schooner
ProEx
Kereco
Rival
Arsenal
NuVista
Bison
Rider
Iteration
Cordero
Innova
Mission
Petrobank
West
Can Southern
Masters
Cdn Superior
GEOCAN
Gentry
ProspEx
Pilot
Clear
Grey Wolf
WranglerWest
Hawk
BlackRock
AltaCanada
Burmis
Berens
RSX
Stylus
Delphi
Diaz
Drilcorp
Peregrine
Duvernay
Kick
Twoco
Great Plains
SignalEnergy
Real
Caribou
Raven
Atlas
Midnight
Zapata
Storm
Espoir
Grand Banks
Tiverton
Crew
Exalta
Choice
Endev
Find
Bear Ridge
Blue Mtn
Cinch
Terra
C1
his chart compares production per
weighted average shares outstanding
for Q2 and Q3. Savvy investors often
look for sustained growth on a per
share basis. Companies that can
continue to grow on a per share basis
are undoubtedly creating value for their
shareholders. This graph is a good test
of that strategy, however it doesn’t
take into account debt levels, another
important factor in the capitalization
of a company.
A company could be justified for being
near the bottom of this chart if they
are there due to one-time events or
they recently paid down large amounts
of debt.
-25
-36
-40
-20
-
20
40
60
80
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
100
27
junior COM PA RIS O N
Enterprise Value Versus Q3 Production ($ per boe)
Median = $82,946 per boe
West
Tusk
Duvernay
Bear Ridge
Fairquest
Capitol
Zenas
Twoco
ProEx
Petrobank
C1
Accrete
Crew
Alberta Clipper
Anderson
Highpine
Cordero
Rider
Kick
Cyries
Innova
Kereco
Midnight
Cdn Superior
BlackRock
Canex
Galleon
Exalta
Valiant
Welton
Dual
Mission
Breaker
Find
Chamaelo
Prairie Schooner
NuVista
Birchcliff
Veteran
Gentry
Rock
Delphi
SignalEnergy
Sawtooth
E4
AltaCanada
Storm
ProspEx
Real
Grey Wolf
Stylus
Cinch
Iteration
RSX
Titan
Bison
Celtic
WranglerWest
Berens
Burmis
Masters
Clear
Atlas
Endev
Raven
Grand
Espoir
Pilot
Peregrine
Hawk
Rockyview
Diaz
Can Southern
Luke
Terra
Caribou
Great Plains
Blue Mtn
Tiverton
Diamond Tree
Drilcorp
Zapata
Choice
Rival
GEOCAN
Grand Banks
Arsenal
407,491
0
28
50,000
100,000
150,000
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
200,000
250,000
VALUATION OF FLOWING PRODUCTION
239,785
219,488
194,993
194,340
182,398
180,737
164,930
160,528
153,223
145,732
141,467
134,465
128,087
123,299
123,063
118,435
117,345
114,871
113,706
110,769
107,415
106,385
103,141
102,826
100,775
100,453
98,736
96,876
96,784
96,493
96,452
94,912
94,171
92,978
92,000
89,622
89,596
88,544
87,551
85,585
85,512
82,971
82,946
81,141
79,731
79,679
77,495
77,315
77,129
76,944
75,862
74,701
72,936
72,269
70,968
69,986
68,840
68,830
68,425
67,874
67,701
67,285
62,876
61,184
61,178
60,650
60,420
60,333
58,921
58,327
58,062
58,055
57,705
57,667
57,328
57,072
56,226
51,238
49,949
48,895
47,643
44,851
43,300
43,159
37,046
34,180
300,000
E
nterprise value is calculated by adding
net debt to market capitalization
where market capitalization is the
weighted average number of shares
outstanding during the quarter multiplied
by the share price on November 30,
2005. Using enterprise value as opposed
to market capitalization alone makes
sense because it takes a company’s debt
into account.
The chart does not take into account
the value of land and seismic data
or the quality and life expectancy of
oil and gas reserves. Companies that
are high on this chart may be there
because investors deem them to
have strong growth prospects, quality
long-life reserves or an exceptional
management team.
350,000
400,000
450,000
junior
C O M PA R IS O N
Q3 Cash Flow Netback ($/boe)
Median = $33.67/boe
44.52
44.07
Twoco
RSX
West
Rider
Crew
Great Plains
Real
WranglerWest
Grey Wolf
Diamond Tree
Duvernay
Bear Ridge
Sawtooth
Highpine
Veteran
Galleon
Kereco
Raven
Celtic
Innova
Find
Endev
Mission
Masters
Chamaelo
Birchcliff
Exalta
Cdn Superior
Rival
Canex
Breaker
Storm
Drilcorp
Gentry
Cyries
Titan
Can Southern
C1
Rockyview
Iteration
NuVista
ProspEx
Alberta Clipper
Grand
Cinch
Clear
Kick
Luke
Cordero
Anderson
Caribou
Burmis
Hawk
Diaz
AltaCanada
Prairie Schooner
Midnight
Fairquest
Accrete
Tusk
ProEx
Capitol
Blue Mtn
Zapata
Berens
Rock
Espoir
Zenas
BlackRock
SignalEnergy
Stylus
Petrobank
Tiverton
Grand Banks
Valiant
Delphi
Bison
E4
Pilot
GEOCAN
Atlas
Peregrine
Welton
Terra
Dual
Choice
Arsenal
42.00
41.43
40.96
40.11
39.34
38.48
38.37
38.10
38.06
38.01
37.77
37.62
37.02
36.83
36.65
36.65
36.55
36.48
36.25
36.16
36.14
36.08
36.04
35.95
35.88
35.65
35.55
35.42
35.01
34.95
34.85
34.78
34.73
34.54
34.23
34.08
34.06
33.99
33.80
33.68
33.67
33.67
33.66
33.54
33.16
32.82
32.65
32.61
31.82
31.80
his is a measure of how much cash
31.41
31.14
flow companies received from each
30.93
boe of production during Q3. Due to
30.85
30.81
higher commodity prices, the median
30.81
of $33.67 per boe is up significantly in
30.75
30.64
comparison to Q2, which had a median
30.28
cash flow netback of $25.09 per boe.
30.10
29.52
Cash flow netbacks are influenced
28.93
28.87
by commodity mix, spot or hedged
28.76
prices, cash taxes, royalties, processing
28.75
27.87
requirements, operating expenses and
27.78
general & administrative expenses.
27.53
27.52
Cash flow, also referred to as funds from
27.27
27.07
operations, is the result of adding non27.00
cash expenses such as depreciation and
26.92
future taxes to net earnings. Cash flow in
26.70
26.45
this case is a measurement that is oil and
26.14
gas industry specific and is not defined
25.86
25.54
by Generally Accepted Accounting
25.03
Principles (GAAP) in Canada.
23.56
PRODUCING CASH FLOW
T
19.67
19.47
18.64
17.98
12.76
-
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
50.00
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
29
junior COM PA RIS O N
Q3 Operating Expenses ($/boe)
Median = $7.86 /boe
20.46
Terra
Tiverton
Pilot
Welton
Zapata
C1
Choice
GEOCAN
Arsenal
Rock
Grand
Blue Mtn
Drilcorp
Peregrine
Breaker
Tusk
Stylus
Espoir
Gentry
Sawtooth
Valiant
Titan
Chamaelo
Anderson
Delphi
Clear
WranglerWest
Great Plains
Celtic
Midnight
Kereco
Veteran
Caribou
Atlas
Hawk
Mission
Raven
Dual
Kick
Cdn Superior
Rival
Birchcliff
Masters
E4
Cyries
Burmis
Fairquest
BlackRock
Canex
Capitol
Bear Ridge
Rockyview
SignalEnergy
Innova
Alberta Clipper
RSX
Diaz
Real
Berens
Highpine
Galleon
West
Find
Petrobank
Storm
Rider
Bison
Cinch
Grand Banks
Luke
Endev
Cordero
Iteration
ProEx
Prairie Schooner
Duvernay
Exalta
Diamond Tree
ProspEx
NuVista
AltaCanada
Crew
Grey Wolf
Accrete
Can Southern
Twoco
Zenas
16.89
16.80
16.08
15.59
ompanies that are efficient operators
are attractive because they can
generate more cash flow and profits
from their production. The ability to be
an efficient operator often relates to
the productivity of wells, the proximity
of producing areas, economies of scale,
control over facilities and whether
a company uses conventional or
unconventional production methods.
We have not added transportation
expenses to operating expenses for this
comparison. Approximately two thirds
of the companies in this group are now
showing transportation expenses as a
separate line on their income statements,
whereas some companies are still
reporting revenue net of transportation
expenses. For those companies that did
report Q3 transportation expenses, the
median amount was $1.31 per boe.
2.49
-
30
C
COSTS FROM THE FIELD
14.60
14.51
13.96
13.69
13.20
13.02
12.92
12.77
12.68
12.66
11.70
11.49
11.47
10.89
10.39
10.09
10.05
9.97
9.77
9.60
9.32
9.28
9.23
9.19
9.04
8.97
8.88
8.83
8.83
8.66
8.64
8.57
8.47
8.40
8.39
8.22
8.08
8.06
7.86
7.85
7.81
7.78
7.71
7.71
7.57
7.53
7.30
7.20
7.19
7.18
7.16
7.15
7.03
7.02
7.00
6.98
6.96
6.96
6.91
6.88
6.75
6.67
6.55
6.22
5.98
5.95
5.80
5.69
5.58
5.57
5.49
5.43
5.35
5.14
4.92
4.70
4.65
4.56
4.54
4.30
3.61
5.00
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
10.00
15.00
20.00
25.00
junior
C O M PA R IS O N
Q3 General and Administrative Cash Expenses ($/boe)
Median = $2.69/boe
8.79
Dual
Welton
Valiant
SignalEnergy
Stylus
Fairquest
Drilcorp
Capitol
Zenas
Can Southern
Accrete
Petrobank
Cdn Superior
Tiverton
Iteration
Peregrine
Caribou
Berens
Anderson
AltaCanada
Bear Ridge
Cinch
RSX
Cordero
Alberta Clipper
Diaz
C1
Chamaelo
Espoir
Choice
Great Plains
Tusk
West
Rival
GEOCAN
Terra
Rockyview
Pilot
Sawtooth
Veteran
ProspEx
Midnight
Birchcliff
Titan
Grand Banks
Rock
Gentry
Innova
WranglerWest
Grey Wolf
Burmis
Luke
Breaker
Arsenal
Masters
Highpine
Delphi
Endev
Zapata
Clear
Diamond Tree
Bison
Grand
Canex
Galleon
Blue Mtn
Exalta
Real
Mission
Storm
Cyries
Raven
Atlas
Kereco
Hawk
Prairie Schooner
Celtic
Rider
Crew
ProEx
Duvernay
Kick
NuVista
Find
BlackRock
Twoco
8.44
6.23
6.21
6.17
6.02
5.89
5.88
5.83
5.79
5.27
4.97
4.73
4.72
4.70
4.58
4.55
4.46
4.39
4.38
4.15
3.92
3.88
3.86
3.75
3.57
3.54
3.53
3.53
3.46
3.45
3.38
3.33
3.31
3.27
3.18
3.17
3.17
3.02
2.92
2.84
2.79
2.71
2.68
2.68
2.66
2.64
2.60
2.50
2.44
2.38
2.31
2.30
2.21
2.06
2.03
2.01
1.86
1.86
1.84
1.81
1.76
1.67
1.60
1.58
1.56
1.56
1.42
1.34
1.28
1.27
1.26
1.26
1.24
1.24
1.12
0.94
0.87
0.87
0.84
0.72
0.68
0.50
0.47
0.25
0.19
-
1.00
2.00
3.00
4.00
5.00
T
COSTS FROM THE OFFICE
o a degree, general and administrative
(G&A) expenses should naturally
be lower on a per boe basis for larger
companies. This is because certain costs
do not change regardless of the amount
of production. G&A includes payroll,
office leases, travel and expensed office
items. These expenses can also include
restructuring costs, as is the case with
a number of the companies at the top of
this chart. For investors, it is obviously
better to see comparably lower amounts
of G&A per boe.
6.00
Median G&A expenses of $2.69 per boe for
the juniors in Q3 2005 are much higher
than the median for the trusts group of
$1.34 per boe in the same period.
We have improved our ability to
separate out non-cash G&A expenses, so
comparisons to previous quarters may be
misleading. Non-cash expenses, which
are primarily stock option expenses, are
not included in this chart for Q3. During
Q3, the median non-cash G&A amounted
to an additional $1.17 per boe.
7.00
8.00
9.00
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
10.00
31
junior COM PA RIS O N
Q3 Depletion, Depreciation and Accretion Expenses ($/boe)
Median = $16.95/boe
37.42
Grand Banks
Caribou
Bear Ridge
Welton
Anderson
E4
Berens
Highpine
Cdn Superior
Valiant
Twoco
Innova
Atlas
Raven
Dual
Capitol
Espoir
Rockyview
Great Plains
Iteration
Clear
Blue Mtn
Tiverton
Tusk
Rock
West
Peregrine
Grand
SignalEnergy
Stylus
Midnight
Endev
Cinch
Can Southern
Birchcliff
Exalta
Fairquest
Sawtooth
RSX
Mission
Celtic
Pilot
Alberta Clipper
Drilcorp
WranglerWest
Delphi
Breaker
Galleon
Real
Cyries
Diaz
Zenas
ProspEx
Cordero
GEOCAN
Kick
Burmis
Prairie Schooner
Chamaelo
Find
Kereco
Duvernay
C1
Masters
Rival
Bison
Canex
Crew
AltaCanada
NuVista
Storm
Diamond Tree
Grey Wolf
Accrete
Petrobank
Gentry
Luke
Veteran
Titan
Terra
Zapata
Arsenal
Hawk
Rider
ProEx
Choice
BlackRock
33.01
28.91
28.39
28.05
27.24
26.31
25.95
25.22
24.60
23.90
23.84
23.77
23.11
23.09
22.85
22.84
22.63
22.43
21.85
21.49
21.40
21.34
21.33
21.26
21.25
21.23
21.22
20.56
20.27
19.81
19.79
19.69
20.17
19.39
18.32
18.22
18.16
17.81
17.73
17.64
17.32
17.11
16.95
16.93
epletion and depreciation expenses
16.88
are an approximation of finding
16.81
16.49
and
development costs for oil and gas
15.81
reserves. The lower the better.
15.67
15.54
This expense is an ongoing normal
15.33
15.13
write down of assets as they are used
15.12
up. Higher amounts mean that reserves
15.08
15.06
values are being decreased more rapidly.
14.72
This could be because they were valued
14.72
14.25
too highly in the first place, or they are
14.17
losing value at a faster pace for any
14.14
14.00
number of reasons.
13.94
13.93
The oil and gas industry’s increasing
13.87
costs over recent years have been
13.65
13.48
driving finding and development costs
13.31
higher. As a result, companies have
13.30
13.21
a higher amount of capitalized costs
13.19
that must be depleted through rising
13.05
13.01
depletion rates.
12.71
12.36
Accounting styles vary in that some juniors
12.19
show accretion as a separate line item,
12.08
12.08
while others include it with depletion
11.87
and depreciation. Either way, we add the
11.48
10.19
accretion in for this calculation.
10.02
9.96
9.73
9.63
8.62
A RISING EXPENSE
D
6.40
-
32
5.00
10.00
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
15.00
20.00
25.00
30.00
35.00
40.00
junior
C O M PA R IS O N
Annualized Q3 Cash Flow Multiples
Enterprise Value to Annualized Cash Flow Median = 7.2
Market Price to Annualized Cash Flow Median = 6.4
26.4
West
Tusk
Zenas
Fairquest
Capitol
Duvernay
Petrobank
ProEx
Dual
Bear Ridge
Welton
Accrete
C1
Alberta Clipper
Anderson
Twoco
BlackRock
Cordero
Valiant
Kick
Midnight
Crew
Cyries
Highpine
Delphi
E4
Innova
SignalEnergy
Prairie Schooner
Rock
Terra
Kereco
Cdn Superior
Canex
Rider
Stylus
Exalta
Galleon
Breaker
Atlas
Bison
Arsenal
Mission
NuVista
Find
Chamaelo
AltaCanada
Peregrine
Gentry
Choice
Birchcliff
Veteran
Berens
Pilot
ProspEx
Storm
Cinch
Iteration
Sawtooth
Burmis
Espoir
Titan
Clear
Grey Wolf
Real
Celtic
Blue Mtn
Tiverton
Masters
Hawk
Diaz
Grand
Caribou
WranglerWest
Luke
Endev
Rockyview
Can Southern
GEOCAN
Raven
RSX
Zapata
Great Plains
Drilcorp
Grand Banks
Diamond Tree
Rival
21.3
17.6
17.1
16.5
15.7
15.3
14.4
14.1
13.9
13.4
12.5
11.6
10.3
10.3
10.1
10.1
9.9
9.8
9.4
9.4
8.9
8.9
8.9
8.7
8.4
8.3
8.2
8.1
8.1
8.1
8.0
7.9
7.7
7.7
7.6
7.5
7.4
7.4
7.3
7.3
7.3
7.3
7.2
7.1
7.0
7.0
7.0
6.8
6.8
6.8
6.5
6.5
6.3
6.3
6.2
6.1
6.0
6.0
5.8
5.7
5.7
5.5
5.5
5.3
5.2
5.2
5.1
5.1
5.1
5.1
4.9
4.9
4.9
4.8
4.7
4.7
4.6
4.6
4.5
4.5
4.5
3.9
3.8
3.7
3.6
3.3
0.0
5.0
10.0
Enterprise Value to Annualized Cash Flow
Market Price to Annualized Cash Flow
T
MULTIPLE VALUATION
his calculation uses the market close
price at the end of November combined
with Q3 2005 weighted average shares
outstanding, net debt and cash flow. The
values shown on the chart relate to the
enterprise value multiples of annualized
cash flow denoted by the black bars. The
grey bars, on the other hand, do not take
debt into account as they are simply a
reflection of market price as a multiple
of annualized cash flow.
15.0
20.0
The most successful investors are able
to forecast cash flow in future quarters
because changes in cash flow normally
correspond to changes in share price.
Average cash flow multiples are lower in
this iQ Report compared to the previous
quarter. Median levels in the Q2 2005
report were 9.1 times for enterprise value
to cash flow and 8.7 times for market
price to cash flow. The reason for this
change is that with higher commodity
prices, companies had higher cash flow
in relation to their production.
25.0
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
30.0
33
junior COM PA RIS O N
Q3 Net Debt to Annualized Cash Flow
Median = 0.6
-3.0
34
3.9
2.0
1.9
1.9
1.8
1.8
1.7
1.7
1.6
1.6
1.5
1.5
1.2
1.2
1.2
1.1
1.1
1.0
1.0
1.0
1.0
1.0
0.9
0.9
0.9
0.9
0.9
0.9
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.8
0.7
0.7
0.7
0.7
0.7
0.7
0.6
0.6
0.6
0.6
0.6
0.6
0.6
0.5
0.5
0.5
0.5
0.5
0.5
0.4
0.4
0.4
0.3
0.3
0.3
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.0
0.0
D
LEVERAGING RETURNS WITH DEBT
Welton
Peregrine
West
SignalEnergy
Arsenal
Delphi
Pilot
GEOCAN
Rock
Accrete
E4
Petrobank
Duvernay
Bison
Innova
Kereco
Drilcorp
Caribou
AltaCanada
Tiverton
RSX
Sawtooth
Midnight
Prairie Schooner
Birchcliff
Zapata
Atlas
Stylus
Terra
Bear Ridge
Cyries
Great Plains
Blue Mtn
Valiant
Gentry
NuVista
Storm
Highpine
WranglerWest
Veteran
Dual
Galleon
Espoir
Kick
Celtic
Masters
Hawk
Diaz
Titan
Rider
Choice
Endev
Anderson
Clear
Grand
Rival
Find
Cdn Superior
Crew
Real
ProspEx
Raven
Canex
Breaker
C1
Luke
Berens
Diamond Tree
Grey Wolf
Twoco
Cordero
Burmis
Exalta
ProEx
Mission
Grand Banks
Rockyview
Tusk
Cinch
Fairquest
Iteration
Alberta Clipper
Capitol
Can Southern
BlackRock
Zenas
Chamaelo
0.0
-0.1
-0.1
-0.2
-0.4
-0.6
-0.6
-0.7
-0.7
-0.7
-0.8
-1.1
ebt to annualized cash flow offers
a good measure of a company’s
leverage to debt. It compares, in years,
how long it would theoretically take to
become debt free if all the company’s
cash flow was dedicated to paying
down debt. A certain amount of debt
is often good for shareholders because
it leverages their potential gains. High
levels may sometimes be warranted
due to a company’s ability to bring on
additional cash flow or bring down debt
in subsequent quarters.
The median debt to cash flow ratio
is lower in this quarter compared to
previous quarters. This is likely due
to higher cash flows this quarter, not
lower net debt.
Companies at the bottom of this chart
have a positive cash position that they
will be able to use for future growth.
-1.4
-1.5
-2.0
-2.2
-2.0
-1.0
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
0.0
1.0
2.0
3.0
4.0
5.0
junior
C O M PA R IS O N
Share Price Change (%)
July through September Median = 29%
July through November Median = 24%
-40
109
109
103
101
80
80
79
73
72
69
68
65
64
63
54
54
52
51
50
49
47
43
42
40
39
39
38
38
36
34
33
33
33
31
31
31
31
30
30
29
29
29
28
25
25
23
23
23
21
21
19
18
18
16
16
16
15
15
15
15
14
14
14
14
14
12
11
11
10
Share price change from July through September 2005
Share price change from July through November 2005
T
he median increase in junior company
share prices during the third quarter
was an impressive 29 percent. Only
three companies had negative returns
during this time period.
WHAT A QUARTER FOR INVESTORS
Petrobank
Berens
Find
Grey Wolf
Titan
Rival
Twoco
West
Galleon
ProEx
Rider
Real
Exalta
Diamond Tree
Cyries
Delphi
Birchcliff
Cdn Superior
Sawtooth
Storm
Bear Ridge
Crew
NuVista
GEOCAN
Capitol
Prairie Schooner
Grand Banks
Arsenal
Choice
Rock
Bison
Endev
Burmis
AltaCanada
Grand
RSX
Cinch
Accrete
Duvernay
Breaker
Cordero
Rockyview
Luke
Midnight
Masters
Atlas
SignalEnergy
Tiverton
Veteran
Stylus
Kereco
Great Plains
Mission
Iteration
Clear
Celtic
Gentry
Highpine
Innova
Hawk
Raven
Blue Mtn
WranglerWest
Pilot
Caribou
Espoir
Terra
C1
ProspEx
Diaz
Peregrine
Drilcorp
Zapata
BlackRock
Canex
Chamaelo
Kick
Tusk
Can Southern
8
6
6
6
5
5
5
If you add on the subsequent two
months of October and November 2005,
the median increase in junior share
prices decreased slightly to 24 percent
over the five month period.
The difference between the black bar
and the grey bar on this chart displays
shares price changes in October and
November, when the market cooled off.
The returns acheived during Q3 were
nothing short of spectacular for investors.
These kind of returns shouldn’t be
expected on an ongoing basis, however
it is just this potential that lures a lot of
investors into the sector.
-9
-9
-17
-20
-
20
40
60
80
100
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
120
35
junior COM PA RIS O N
Juniors Data Table
iQ profile
Q305
Sept 30/05
weighted
Nov 30/05
Q305
shares
shares
Q305
Q305
Q305
share
oil natural gas
total outstanding outstanding Sept 30/05
net
Stock
Q305
price production
production production
- basic*
earnings
symbol &
net debt
cash flow
- basic*
Company
President
($)
(bbl/d)
(mmcf/d)
(boe/d)
(000)
(000)
($000)
($000)
($000)
exchange
Accrete
Peter Salamon
GZ-T
9.75
458
4.462
1,202
15,233
15,233
21,474
3,399
850
AltaCanada
Don Foulkes
ANG-V
0.77
101
3.463
678
60,018
60,018
7,857
1,930
379
Alberta Clipper
Kel Johnston
ACN-T
3.65
302
3.022
806
30,581
31,835
(8,423)
2,496
481
Anderson
Brian Dau
AXL-T
7.50
250
11.991
2,249
35,160
47,806
13,538
6,745
543
Arsenal
Michael Vandale
AEI-T
1.29
1,469
0.562
1,563
30,943
33,401
13,495
1,835
(200)
Atlas
Richard Lewanski
AED-T
4.35
1,117
15.845
3,758
51,196
51,390
30,145
8,652
(971)
Bear Ridge
Russell Tripp
BER-T
5.15
318
2.795
784
27,927
27,928
9,018
2,741
9,259
Berens
Bob Steele
BEN-T
2.78
165
10.832
1,970
48,015
52,961
2,137
5,233
534
Birchcliff
Jeffery Tonken
BIR-T
6.40
919
22.243
4,626
56,365
56,365
53,748
15,302
4,336
Bison
Nicolas Swagor
BIS.A-V
8.37
1,607
0.005
1,608
12,093
12,104
19,569
4,142
3,204
BlackRock
John Festival
BVI-T
10.45
8,414
0.000
8,414
95,007
95,141
(127,645)
21,504
10,218
Blue Mtn
Randy Pawliw
GAS-T
5.20
730
9.663
2,341
21,430
21,430
20,160
6,356
863
Breaker
Dan O'Neil
WAV.A-V
5.40
478
4.355
1,204
20,535
21,418
3,369
3,878
1,283
p38 Burmis
Aidan Walsh
BME-T
3.90
695
6.864
1,839
32,430
34,224
(643)
5,381
1,648
C1
Hugh Patillo
CTT-T
2.48
276
1.769
571
32,954
33,037
1,463
1,790
446
Can Southern
John McDonald
CSW-T
6.75
26
7.554
1,285
14,475
14,491
(23,106)
4,047
1,003
Cdn Superior
Greg Noval
SNG-T
2.38
647
12.345
2,705
111,972
115,955
12,451
8,871
1,495
Canex
Stephen Kapusta
CXO-V
3.60
551
2.117
904
24,512
24,515
2,841
2,945
1,126
Capitol
Monty Bowers
CPX-V
4.95
808
1.383
1,039
40,840
47,970
(12,738)
2,876
(526)
Caribou
Christina Fehr
CBU-V
2.25
700
4.672
1,479
29,818
34,811
17,678
4,329
(363)
Celtic
David Wilson
CLT-T
11.51
2,833
13.485
5,081
27,400
28,923
40,188
17,082
5,729
Chamaelo
Robert Zakresky
CXN-T
6.61
403
3.896
1,052
19,520
20,368
(31,183)
3,489
1,155
Choice**
Gordon Harris
CZE-V
0.99
79
7.752
1,371
57,245
57,619
4,818
2,268
653
Cinch
George Ongyerth
CNH-T
2.45
223
6.234
1,262
43,225
47,813
(10,164)
3,908
851
Clear
Jeff Boyce
CEN-T
4.70
988
18.040
3,995
52,421
53,236
24,063
12,327
1,750
Cordero
David Elgie
COR-T
6.20
1
8.520
1,421
27,125
27,125
121
4,268
1,057
Crew
Dale Shwed
CR-T
18.23
714
20.272
4,093
29,114
31,436
19,573
15,423
6,328
Cyries
Don Archibald
CYS-T
15.34
1,222
25.816
5,525
37,285
39,259
56,238
17,650
6,101
p40 Delphi
David Reid
DEE-T
5.57
889
19.580
4,152
50,650
50,795
72,954
10,199
1,190
p42 Diamond Tree
Kelly Ogle
DT-T
6.75
1,117
8.688
2,565
18,558
22,241
2,853
8,992
3,540
p44 Diaz
Bob Lamond
DZR-T
0.99
188
5.782
1,152
59,815
59,815
7,651
3,299
1,101
Drilcorp
Rick Wlodarczak
DCL-V
0.40
205
2.013
541
47,574
47,574
7,398
1,733
884
Dual
Martin Cheyne
DLX-T
2.42
379
1.578
642
24,356
26,977
3,007
1,101
27
Duvernay
Michael Rose
DDV-T
43.29
2,147
48.392
10,212
47,856
47,893
169,797
35,758
15,532
E4
Paul Starnino
EFE-V
1.71
249
2.248
624
24,162
33,624
9,288
1,500
(311)
Endev
Cameron MacGillivray ENE-T
2.14
550
16.957
3,376
88,059
88,059
23,832
11,231
3,693
Espoir
Bruce Beynon
ESX.A-V
2.90
60
4.535
816
15,260
17,055
5,226
2,158
291
Exalta
James Blair
EXA-T
5.92
405
8.642
1,845
31,057
31,139
(1,657)
6,092
1,824
Fairquest
Richard Walls
FQE-T
8.18
112
5.664
1,056
26,049
26,049
(7,858)
2,993
467
Find
Bill Davis
FE-T
8.15
1,122
11.588
3,053
33,498
33,898
14,528
10,183
3,717
p46 Galleon
Steve Sugianto
GO.A-T
22.55
3,489
27.452
8,064
32,683
32,695
73,086
27,324
9,112
Gentry
Hugh Ross
GNY-T
6.31
1,291
11.177
3,154
38,772
38,850
31,469
10,091
4,336
GEOCAN
Wayne Wadley
GCA-T
1.90
1,752
1.560
2,012
28,605
43,504
32,486
4,728
1,024
Grand
Andrew Hogg
GPP-V
4.90
1,298
4.782
2,095
23,694
23,694
12,068
6,489
1,964
Grand Banks
Edward McFeely
GBE-V
1.55
227
4.755
1,020
26,770
28,080
(3,725)
2,532
(1,113)
p48 Great Plains
Stephen Gibson
GPX-T
2.45
591
5.999
1,591
29,446
34,458
18,650
5,870
838
Grey Wolf
Robert Watson
GWE-T
5.40
463
10.309
2,181
30,802
30,802
1,901
7,700
3,143
Hawk
Steve Fitzmaurice
HK.A-V
6.00
644
6.074
1,656
14,397
14,397
11,211
4,787
2,116
Highpine
Gordon Stollery
HPX-T
22.00
5,562
18.277
8,608
44,208
44,239
86,773
29,796
6,683
p50 Innova
Kevin Gibson
IXL-T
6.99
997
9.470
2,575
35,040
35,040
40,338
8,643
2,034
Iteration
Brian Illing
ITX-T
4.85
197
15.810
2,832
48,824
48,829
(25,243)
8,855
1,519
Kereco
Grant Fagerheim
KCO-T
14.20
2,736
14.764
5,197
33,716
33,716
79,431
17,523
4,645
Kick
Tim Hunt
KEC-T
7.50
1,754
8.033
3,093
44,391
44,770
22,344
9,436
3,913
Luke
Harold Pedersen
LKE-T
4.19
182
15.441
2,756
37,039
37,129
3,812
8,320
2,971
Masters
Geoff Merritt
MSY-T
5.60
703
3.872
1,348
14,462
14,470
10,530
4,476
1,781
Midnight
Fred Woods
MOX-T
3.95
270
4.885
1,084
26,328
26,328
11,344
3,073
487
Mission
Trent Yanko
MSO-T
7.27
1,152
2.685
1,600
21,914
21,999
(5,040)
5,318
1,807
NuVista
Alex Verge
NVA-T
17.39
2,419
44.727
9,874
45,479
48,344
94,001
30,699
11,339
Peregrine
Gary Gardiner
PEG-T
2.00
740
4.165
1,434
31,076
31,570
24,375
3,108
(65)
Petrobank
John Wright
PBG-T
8.29
1,624
11.485
3,538
58,818
59,148
54,526
8,877
3,170
Pilot
Todd Lemieux
PGY-V
1.50
576
0.208
611
17,919
18,070
10,018
1,453
450
Prairie Schooner James Saunders
PSL-T
19.66
171
18.855
3,314
13,741
17,027
34,693
9,403
2,812
ProEx
David Johnson
PXE-T
16.56
338
17.255
3,214
31,330
32,974
(2,915)
8,953
3,585
ProspEx
John Rossall
PSX-T
3.10
128
11.012
1,963
47,104
47,104
6,127
6,083
6,325
Raven
Laurie Smith
RVL-V
1.75
276
4.414
1,012
33,460
34,900
3,343
3,411
838
Real
Lowell Jackson
RER-T
22.04
5,290
32.521
10,710
35,578
37,141
43,915
38,767
13,579
Rider
Craig Stewart
RRZ-T
19.00
1,785
36.679
7,898
45,392
45,581
64,360
30,107
13,795
p52 Rival
Colin Ogilvy
RGY-V
1.81
444
2.820
914
19,121
19,121
4,967
2,989
1,289
Rock
Allen Bey
RE-T
4.71
345
5.985
1,343
19,587
19,589
22,643
3,552
634
Rockyview
Steve Cloutier
RVE-T
5.62
76
5.719
1,029
12,069
12,069
(7,800)
3,225
742
RSX
Lee Baker
RSX-V
1.53
750
2.376
1,146
42,885
43,102
17,971
4,646
1,934
Sawtooth
Charlie Vandaele
SAW-V
2.00
257
2.255
633
22,045
23,609
8,401
2,199
811
SignalEnergy
Cameron Bailey
SGI-T
1.34
242
5.990
1,240
59,086
68,521
23,737
3,141
536
Storm
Brian Lavergne
SEO-T
5.80
642
15.398
3,208
38,795
39,153
30,625
10,317
6,310
Stylus
Paul Evans
STY-T
3.57
141
5.907
1,126
21,526
21,560
9,753
2,850
517
Terra
Cas Morel
TTR-V
1.81
612
9.498
2,195
62,580
66,777
13,309
3,931
605
p54 Titan
Trevor Spagrud
TTN.A-V
5.30
1,391
2.817
1,861
22,837
22,962
13,421
5,912
2,440
Tiverton
Blake Lowden
TIV-T
0.29
377
1.692
659
96,000
96,249
6,406
1,641
167
Tusk
Norm Holton
TSK-T
4.39
331
1.754
623
35,030
35,030
(4,316)
1,757
13
Twoco
Wayne Malinowski
TWO-V
6.95
2
3.732
624
14,773
14,773
244
2,556
779
p56 Valiant
Bruce Hammond
VLE-T
3.89
410
1.549
668
15,296
16,186
5,228
1,655
(62)
Veteran
Phillip Loudon
VTI-T
1.67
468
5.578
1,398
66,273
67,265
13,079
4,760
2,006
Welton
Don Engle
WLT-T
1.14
199
1.827
504
30,162
33,001
14,346
911
(532)
West
Ken McCagherty
WTL-T
8.40
897
1.475
1,143
51,412
51,665
33,834
4,416
769
WranglerWest
Bill Kerr
WX-V
8.01
443
2.562
870
6,361
6,361
8,939
3,080
942
p58 Zapata
George Paulus
ZCO-V
13.00
1,423
8.135
2,779
8,199
8,205
25,805
7,397
3,552
Zenas
John Rooney
ZNS-T
4.74
310
1.360
537
22,764
26,916
(10,906)
1,376
(327)
* For A/B share structures, B shares have been converted using September 30, 2005 close prices.
** Choice Resources’ most recent quarter, ended on August 31, 2005, was used for this report.
36
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Company
A.I.S. Resources
Alpetro Resources
Arapahoe Energy
Arrow Energy
Aspen Group Resources
Blue Parrot Energy
The Buffalo Oil Corporation
Canadian Spirit Resources
Cannon Oil and Gas
Castle Rock Petroleum
Cheyenne Energy
Chirripo Resources
Churchill Energy
Coral Sea Petroleums
Cruiser Oil & Gas
Deep Resources
Defiant Resources
Desmarais Energy
Eastshore Energy
Emerald Bay Energy
Exceed Energy
Expedition Energy
Fairmount Energy
Firstland Energy
High Plains
Highview Resources
Keeper Resources
Kelso Energy
Kootenay Energy
Landmark Oil & Gas
LongBow Energy
Magnus Energy
Milagro Energy
Mystique Energy
Northern Sun Exploration
NuLoch Resources
Peerless Energy
Pennant Energy
Petro-Reef Resources
Pine Cliff Energy
Point North Energy
Prairie Pacific Energy
Questerre Energy
Reece Energy Exploration
Regal Energy
Result Energy
Ripper Oil & Gas
Rolling Thunder Exploration
Rosetta Exploration
San Telmo Energy
Shellbridge Oil & Gas
Spitfire Energy
Tango Energy
Tartan Energy
Tenergy
Texalta Petroleum
Trafina Energy
Triton Energy
Trivello Ventures
Tuscany Energy
Vero Energy
Watch Resources
WaveForm Energy
Westchester Resources
White Fire Energy
Winslow Resources
Yangarra Resources
President/CEO
Alan Smith
Nazrul Islam
Jeffrey L. Standen
Eric Gosselin
Kevin O'Connor
Bill Elligson
Trevor Penford
Phillip Geiger
Robert Tessari
Paul Pypers
Tim Cooney
Issa Abu-Zahra
James Baker
Tom Walton
Kurt Miles
Eugene Wasylchuk
Rick Ironside
James Long
Gary Burns
Shelby Beattie
Barry Dorin
Scott St. John
Joseph Durante
David van der Lee
Ben Anderson
John Cassels
Loren Komperdo
Hugh Gillard
Mark Naylor
Robert Keenan
Mark Ross
Murray Stewart
Jeffrey Rekunyk
Victor Luhowy
Chris Cooper
James McIndoe
Wade Becker
Thomas Yingling
Joseph Werner
George Fink
John Emery
Malcolm Todd
Michael Binnion
Lorne A. Swalm
Doug McNichol
William Matheson
Jerry Ball
Peter Bolton
Glenn D. Graden
Brian Bass
Wayne Babcock
Keith Chase
John Bell
John Komarnicki
Jan Alston
William Nixon
J. Terry McCoy
Michael Zuber
Arndt Roehlig
Greg Busby
Doug Bartole
Paul Watson
Don Rae
Kevin O'Connor
Robert Rosine
Fred Rumak
James Evaskevich
Symbol &
Exchange
AIS-V
ALF-V
AAO-V
AOF-V
ASR-T
BPA-V
BFO-V
SPI-V
COO-V
RCK.A-V
CHY-V
CHO-V
CEI-V
CPO-V
COG-V
DEP-V
DFR-T
DES-V
EST.A-V
EBY-V
EX.A-V
XPD-V
FMT-V
FLD-V
HYE-V
HVW-X
KEE-V
KEL-V
KTY-V
LMK-V
LBV-V
MEI.A-V
MIG-T
MYS-V
NSE-V
NLR.A-V
PRY.A-V
PEN-V
PER-V
PNE-V
PNY-T
PRP-V
QEC-T
RXR-V
RGN-V
RTE-V
RIP-V
ROL.A-V
RSA-V
STU-V
SHB-T
SEL-V
TEI-V
TEW-V
TGY-T
TEX.A-V
TFA.A-V
TEZ-V
TRV-V
TUS-V
VRO-T
WR-V
WE.A-V
WSR-V
WF-T
WLR-V
YAN-V
November 30
share price
0.24
0.18
0.63
0.61
0.26
0.31
1.60
3.30
0.26
1.30
0.45
0.75
2.50
0.13
0.35
0.66
3.93
1.48
1.32
0.23
0.18
0.57
1.90
0.45
0.83
0.17
1.00
0.14
0.88
0.21
0.11
1.30
0.67
0.60
0.83
1.69
4.71
0.34
0.95
0.42
3.00
2.00
0.55
1.65
0.18
1.03
1.35
1.25
0.88
0.40
1.20
0.48
0.70
0.65
4.65
0.15
2.70
0.99
0.21
0.32
4.39
0.19
3.20
0.22
2.50
0.20
0.50
Q3 2005
production
(boe/d)
7
48
3
228
288
n/a
403
n/a
60
85
228
268
100
8
39
391
386
409
297
76
100
309
115
34
136
178
65
78
57
n/a
10
n/a
457
154
119
14
75
n/a
167
n/a
n/a
n/a
95
325
121
448
336
0
209
n/a
n/a
152
184
240
n/a
26
307
n/a
n/a
24
n/a
n/a
92
n/a
375
9
n/a
EMERGING
COMPANIES
WATCH LIST
This list of emerging public
companies serves as our
reference point for tracking
companies’ growth and their
potential inclusion in the iQ
Report. With the current pace
of oil and gas operations in
Canada, this list is always
changing and is by no means
exhaustive. If you know of any
other oil and gas company that
belongs on this list, please
feel free to let us know.
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
37
CONTINUED GROWTH
Burmis Energy Inc. is a growing junior oil and gas company. The Company is focused on developing
longer life, liquid rich natural gas and light crude oil production in its core area of west central Alberta. This
area features multi-zone targets at medium depths. The Company is also developing shallow natural gas in
east central Alberta.
HISTORY
Burmis has increased production every quarter since inception and production is expected to increase to
• Start-up January 28, 2003
2,700 boe/d on start-up of the Pembina gas plant in January 2006, and average 2,800 boe/d over the year.
• TSX listing on January 31, 2003
Burmis trades on the TSX under the symbol "BME".
• Issued 6.5 million shares under two private placements in 2003, raising gross proceeds of $5.5 million
• Issued 5.4 million shares under two private placements
in 2004 raising gross proceeds of $8.4 million
$35 MILLION CAPITAL PROGRAM IN 2006
• Focused in west central Alberta
• Includes approximately 31 gross (16.7 net) wells
• Issued 7.0 million shares under two private placements
in 2005 raising gross proceeds of $21.9 million
• Continued development of Pembina property
• Development and infill drilling on Company's shallow gas assets
• Participate in five (1.6 net) Nisku wells for both oil and gas
• Exploration drilling in two new areas
Production
• Significant funds allocated for land and seismic acquisition
Average boe/d
3000
HIGH IMPACT DRILLING
2000
• The Company is participating in four (1.25 net) exploratory wells at Brazeau targeting the Nisku
formation in 2006
1000
• The Company has one (0.375 net) development location for Nisku oil at Easyford and further
potential on approximately 2,600 net acres of undeveloped land in the Pembina Nisku bank fairway
0
2003
2005
(est.)
2004
Oil & NGLs
2006
(est.)
CURRENT CORE AREA ACTIVITIES
Gas
Funds Flow
Ferrier
• constructing 30 mmcf/d natural gas plant
• two locations for natural gas &
NGLs in 2006
• 15% working interest (4.5 mmcf/d)
$35
$1.00
• op costs for property to drop to ~
$3.00 per boe
$30
$0.80
$0.60
$20
$15
$0.40
per share
$25
millions
Pembina
• ten locations for Q4 2005
• two locations for shallow
natural gas in Q4 2005
• multiple locations for 2006
Minnehik/Hoadley
• 3-D seismic being shot at Pembina to
evaluate Nisku potential
• two gas wells awaiting tie-in
Brazeau
• additional development potential
$10
$0.20
$5
• four Nisku locations scheduled for 2006
0
0.0
2003
2004
2005 (est) 2006 (est)
Funds flow (millions)
per share
Funds flow forcast to range from $31.4 million
($0.92/share) to $34.5 million ($1.00/share) in 2006.
38
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Kehiwin
Easyford
• one development location for
Nisku oil in 2006
• two locations planned for Q4 2005
FINANCIAL & OPERATING HIGHLIGHTS
($000’s, except where indicated)
FINANCIAL
Q2/05
Q1/05
$ 9,672
$ 7,863
$ 7,215
Funds Flow
$ 5,381
$4,110
$ 3,960
$
0.17
$ 0.13
$ 0.14
$ 1,648
$ 873
$ 1,170
$
0.05
$ 0.03
$
32,430
31,224
Per share
OVERVIEW
Earnings
Shares outstanding
Basic
34,225,133
Diluted
37,298,633
Market capitalization
$116 million
Mgmt & directors (diluted)
Credit facility
Q3/05
Revenues, before royalties
22%
$20.0 million
Working Capital (9/30/05)
$0.6 million
Per share
Weighted Average Shares (‘000’s)
0.04
27,928
Capital Expenditures
$ 7,274
$ 5,298
$ 9,342
Working capital (deficit)
$
$(7,872)
$ (6,497)
643
OPERATIONS
Natural gas (mcf/d)
Average price ($Cdn/mcf)
Oil and NGL’s (bbl/d)
Average price ($Cdn/bbl)
Barrels of oil equivalent per day
6,864
5,991
8.87
$ 7.34
695
766
720
$ 63.64
$ 57.98
$ 54.39
$
5,578
$
7.35
1,839
1,764
1,650
Operating netback ($Cdn/boe)
$ 34.71
$ 30.10
$ 28.98
Cash flow netback ($Cdn/boe)
$ 31.80
$ 25.60
$ 26.66
COMPANY FOUNDATIONS
BOARD OF DIRECTORS
MANAGEMENT & OFFICERS
Experienced Management Team
Kenneth R. King
Geologist, Phd., Mineral Economics
Troy K. Brazzoni, P.Geol.
Vice President, Exploration
Focus in west central Alberta
Peter M.S. Longcroft, UK CA
Chairman of the Board
Darrin R. Drall, P. Eng.
Vice President, Corporate Development
• Operational and technical expertise
Rodger A. Tourigny, CA
Scott R. Dyck, CA
Chief Financial Officer
• Proven track record
• Committed with 22% ownership (diluted)
• Multi-zone potential
• Liquid rich natural gas and light oil
Portfolio of Exploration Prospects
and Development Projects
• 83,000 net acres of undeveloped land
• Pembina, Brazeau, Easyford, Ferrier, Kehiwin,
Bigoray, Minnehik/Hoadley
Financial Strength / Low Debt
• Forecasted 2005 debt to trailing cash flow
ratio of 0.2X
Aidan M. Walsh, P. Eng., MBA
President & Chief Executive Officer
of the Company
Brian J. Goodfellow, P.Eng.
Vice President, Production & Operations
James P. Junker, B.Comm.
Vice President, Land
Aidan M. Walsh, P. Eng., MBA
President & Chief Executive Officer
Dallas L. Droppo, Q.C.
Corporate Secretary
Board of Directors
• Integrity, Independence, Experience
CORPORATE OFFICE
1000, 736 – 6th Avenue S.W.
Calgary, Alberta T2P 3T7
Telephone: (403) 781-7230
Fax: (403) 261-9028
Visit us at our website:
www.burmisenergy.ca
for more detailed information
on the Company.
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
39
1500, 444 - 5 Avenue S.W.
Calgary, Alberta T2P 2T8
delphi energy corp.
CORPORATE
Telephone:
Facsimile:
Website:
Email:
(403) 265-6171
(403) 265-6207
www.delphienergy.ca
[email protected]
NOVEMBER 2005
PROFILE
Delphi Energy is a public junior oil and natural gas company based out of Calgary, operating mainly in east central
and north western Alberta and in north east British Columbia. The company is well-positioned for organic growth,
with a large inventory of development opportunities complemented by a high impact exploration program.
Overview
Strategy
Toronto Stock Exchange
Share price (November 22, 2005)
Q3 shares outstanding (million)
Basic
Diluted
Reserves – February 1, 2005
Proved
Proved plus Probable
Reserve life index (P+P)
• Focused on per share value creation
DEE
$5.20
• Positioned for organic growth through the drill bit complemented by strategic
acquisitions that enhance drilling inventory
50.7
53.4
• Focus 80% of capital expenditures on large inventory of lower risk development
and acquisition opportunities with 20% of CAPEX targeting high-impact
exploration projects
9.1 million boe
13.1 million boe
Nine years
• Capitalize on relationships with major industry partners by continuing to pursue
acquisition opportunities and joint-venture deals
Third Quarter 2005 Highlights
• Increased production 137 percent to 4,152 barrels of oil equivalent per day (boe/d) in the third quarter of 2005 from 1,749 boe/d in the same
period of 2004.
• Increased cash flow from operations before change in non-cash working capital by 187 percent to $10,198,584 ($0.20 per share) compared to
$3,556,762 ($0.14 per share) in the previous year.
• Earned $1,190,221 in the third quarter of 2005, up 39 percent from $854,227 in the third quarter of 2004.
• Completed drilling operations on eight wells at Bigstone, Alberta in the third quarter of 2005 with an 88 percent net success rate.
• Increased the Company’s credit facility to $82 million syndicated with two Canadian chartered banks.
Production Growth Profile (boe/d)
Cash Flow ($millions)
$71.5
7,800 - 8,300
Assumptions
6,000
2005
2006
AECO (Cdn$/GJ) $7.50
$7.72
WTI (US$/bbl)
FX (US$/Cdn$)
5,000
$54.80
$50.00
$0.82
$0.84
$12.1
1,706
$6.6
1,063
2003
Natural Gas
40
$40
2004
Current
2005 (F) Exit 2006 (F) Exit
Oil and NGLs
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
$0.10
$0.77
2001
2002
2003
2004
2005
(F)
2006
(F)
2006 Market Guidance
2006 Previous
Production (BOE/D)
6,500 – 6,800
Capital expenditures ($MM)
$50 - $55
Cash flow (millions)
$61 - $64
Cash flow per share
$1.20 - $1.26
Dec 31, 2006 net debt ($MM)
$65 - $70
Debt to cash flow ratio
1.0 -1.1X
CFPS sensitivities
Natural gas +/- $1.00/GJ
Production +/- 100 boe/d
Core Areas
2006 Revised
7,250 – 7,800
$120 - $125
$70 - $73
$1.30 - $1.37
$105 - $110
1.5 – 1.6X
$0.20
$0.02
$0.20
$0.02
North East British Columbia Region
Alberta
- includes high-impact Bigfoot joint
venture farm-in agreement
North West Alberta Region
-high-impact exploration
-shallow gas development
East Central Alberta Region
Edmonton
- low-risk development
Management
North East British Columbia
David Reid
• President & CEO, Director
• 21,000 net acres of undeveloped land
• Production of approximately 1,100 boe/d;
Calgary
100 percent natural gas
• Windflower: Current production of ~160 boe/d;
8,200 net acres
• Delphi is surveying the tie-in route for two existing standing cased gas wells.
Step-out development locations are being delineated for Q1 2006.
Missile: Current production of approximately 265 boe/d; 3,800 net acres
• Up to 10 undrilled low-risk development locations
Helmet: Current production of approximately 60 boe/d; 3,500 net acres
• Identified 20 low-risk development locations with multiple farm-in possibilities
Clarke Lake: Current production of approximately 170 boe/d; 6,100 net acres
• Plans to tie in development well prior to spring breakup
Tony Angelidis
• Senior Vice President Exploration, Director
Mike Kaluza
• Vice President Engineering
Brian Kohlhammer
• Vice President Finance & CFO
Tim Malo
• Vice President Corporate Development
Bigfoot Joint Venture in North East British Columbia
• On Nov. 23, 2005, Delphi announced a joint venture farm-in agreement with a
major producer on a resource play targeting the extensive Jean Marie trend
• Delphi’s preliminary 2006 production estimates from the joint venture range from
750 to 1,000 net barrels of oil equivalent per day.
• Development over the next several years is estimated to result in production from
the joint venture exceeding 4,000 net barrels of oil equivalent per day with earning
potential in excess of 200 sections of land with participation in more than 200
sections in an Area of Mutal Interest.
• First production from the joint venture is expected in April 2006.
• In total, the agreement offers a five to 10-year drilling inventory.
Board of Directors
David Reid
• President & CEO, Delphi Energy Corp.
Tony Angelidis
• Senior Vice President Exploration,
Delphi Energy Corp.
Harry Campbell
• Partner, Burnet, Duckworth, Palmer LLP
North West Alberta
• 100 percent to 10 percent working interest in operated and non-operated properties
• Focus of winter and summer CAPEX programs
• Large undeveloped land base with multi-zone / natural gas prospects
• Exploration drilling for Cretaceous to Devonian prospects defined on 3D seismic
• Approximately 95 percent natural gas, 5 percent NGLs
Fontas: Current production of 500 boe/d net
• 167,000 acres of contiguous land controlled by Delphi and its partners
• Q1 2006 capital program calls for 15 wells to be drilled with 10 - 15 workovers
Berland River: Average working interest of 8 - 100 percent
• 10-22 Devonian exploration well now on production
• 10-22 Cadomin well has been drilled and cased
• 10-8 Devonian exploration well has been cased
Bigstone: Current production is 2,200 boe/d; 9,440 net acres of undeveloped land
• 6-12 wells, $24 to $26 million capital program for 2005
• Q1 2006 capital program calls for 3 to 4 exploration/step-out wells, 6 to 12
development wells and 4 to 5 standing wells to tie-in
Development Joint Venture: Current production is ~100 boe/d from two wells
• Terms: Delphi pays 100 percent of the reentry costs with the senior producer
having the right to convert to a 50 percent interest or gross overriding royalty
• Anticipated production rates expected to be 200 boe/d net to Delphi
• Offers substantial upside without having to drill new wells
Exploration Joint Venture:
• Terms: Delphi pays 100 percent of initial drilling and completion or abandonment
costs to earn 60 percent working interest
• $8 million budget; four-well commitment on high-impact prospects
• Cutbank Cadomin test spud Nov/05; Brazeau Nisku test to spud Dec/05
Henry Lawrie
• Former chief accountant of
Alberta Securities Commission
Robert Lehodey
• Partner, Bennett Jones LLP
Andrew Osis
• President and Principal of Trissio Corporation,
a merchant banking company
Lamont Tolley
• Independent businessman
Contact Information
Delphi Energy Corp
1500, 444 - 5 Avenue SW
Calgary, Alberta
T2P 2T8
T : 403-265-6171
F : 403-265-6207
East Central Alberta
[email protected]
www.delphienergy.ca
•
•
•
•
Toronto Stock Exchange : DEE
DELPHI ENERGY CORP.
•
Current production of ~765 boe/d; 85 percent oil
Additional 15-20 reactivation/optimization opportunities identified
Low-cost infill drilling and field optimization opportunities
Properties classified as low-risk development assets with Delphi as the operator
CORPORATE PROFILE
•
NOVEMBER 2005
•
TSX - DEE
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
41
CORPORATE PROFILE
NOVEMBER 2005
PAGE ONE
VISION AND STRATEGY
HISTORY
Production to date is 100% internally derived full-cycle
exploration
Incorporation of Diamond Tree Resources Ltd. in
April of 2001 as a private company
Continue to build a production base of long-life, liquids-rich gas
reserves processed through owned infrastructure
Reverse takeover of Wise Wood Corporation by
Diamond Tree Resources Ltd. in December 2004
Maintain and strategically utilize our strong capital structure;
currently debt free
Amalgamation and consolidation resulting in
Diamond Tree Energy Inc.
Maintain operatorship and high working interests; currently 90%
and 85% respectively
Current platform is a base for growth in Peace River Arch,
Northwest Alberta and beyond the West 5 meridian
Balance commodity and project risk with greater leverage to gas
Strategic new core area acquisitions or farm-ins
BOE/D PER MILLION SHARES
150
131
Graduated to TSX in April 2005
DIAMOND TREE TODAY
Current production (6 mcf:1 bbl)
Natural gas weighting
2004 average production
Shares outstanding (millions)
basic
fully diluted
3,000 boe/d
70%
1,246 boe/d
Market cap (basic) @ $6.49/share
$144 million
22.2
26.7
125
LONG-TERM PLAN
100
100
Increase RLI through projects that have multizone potential
75
75
25
0
Aggressively carry out our drilling program - 2006
capital spending will be approximately $50 million
financed with cash flow and existing bank lines
41
50
3
2002
2003
2004
2005F
2006 (Est)
SUMMARY OF DIAMOND TREE GROWTH (PRODUCTION - BOE/D)
4,000
Continue to focus on liquids-rich natural gas with
high netbacks and long reserve life
Gain a regional presence in the Peace River Arch
through land purchase and larger farm-ins
3,500
3,000
Gas
2006 GUIDANCE
Oil
2,500
Production
Oil and NGLs (bbls/d)
Natural Gas (mmcf/d)
boe/d
2,000
1,500
1,000
500
0
2002
2003
2004
2005 (Est)
2006 (Est)
Financial
Capital Expenditures ($mm)
Operating Costs ($/boe)
1,225
13.6
3,500
50.0
6.50 - 7.00
TSX : DT
42
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
CORPORATE PROFILE
NOVEMBER 2005
PAGE TWO
OPERATIONS
OPERATIONS
Don D. Copeland (P.Eng.)
Chairman and CEO
Ferrybank - Glauconite & Ellerslie
• 90% operated working interest
• approximately 1,200 boe/d
• one well drilled, one to come in fourth quarter
• owned infrastructure
Kelly J. Ogle
President
David A. Cheesman (B.Sc. Geol.)
VP Exploration
Willesden Green - Glauconite
• 100% operated working interest
• two Glauconite gas wells
• own compression
• current production 400 boe/d (160 liquids; 240 gas)
• one well drilled, one to come in fourth quarter
• will be shooting 3D seismic this winter
David Keenan (P.Eng.)
VP Engineering
Peace River Arch
(Sinclair)
Niton
• prolific discovery well at 11-35
• applied for GPP
• current production in excess of 1,000 bbls/d due to
short-term mrl rescission
• two or three new locations for 2006
• three additional successful wells on
production
• new well at 16-35 recently cased; testing
underway
Kelly A. Tomyn (C.A.)
VP Finance and CFO
Andy Issler
Manager of Land
Brian D. Rex (M.Sc. Geophysics)
Senior Geophysicist
Whitford
Niton
DIRECTORS
Garrington Jurassic
• potential reserve size of 0.5 to 1.0 bcf
• potential initial rate of 0.5 to 1.0 mmcf/d
• depth of 2,350 metres
Don D. Copeland (P.Eng.)
Chairman & CEO Diamond Tree
Ferrybank
Sinclair Farm-in
Kelly J. Ogle
President of Diamond Tree, former President &
CEO of Ranchgate Energy and Opal Energy
Willesden Green
• five section farm-in on a large
independent
• primarily Triassic targets
• extensive seismic coverage
• initial two well commitment completed,
moving to third well
• adding additional lands
Thomas M. Alford
President & CEO of IROC Systems
Corporation
Whitford
Charles W. Berard (P.Eng., LLL, LLB)
Partner Macleod Dixon Law firm
• original core area for company
• current production of 160 boe/d
(all gas)
• drilled three wells in 2005
• identified a new higher impact play type
Howard W. Dixon (B.Comm.)
Independent businessman
Fred A. Moore
President of NUSCO Supply and Manufacturing
Gary B. Unrau (B.Sc.)
Independent businessman and geologist
2006 CAPITAL PROGRAM (MILLIONS)
$11.0
DIAMOND TREE ENERGY LTD.
22%
• Total Project Capex - $50.0 million
• 30 wells to drill in 2006
(5 shallow, 15 medium and 10 deep)
$30.0
60%
$6.0
12%
$3.0
Drill, Case, Complete
Tie-ins, Facilities
Land
Seismic
1410, 111 - 5th Avenue SW
Calgary, Alberta
T2P 3Y6
Ph: (403) 237-9175
Fax: (403) 237-9140
www.diamondtree.ca
6%
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
43
DIAZ RESOURCES LTD.
Corporate Profile
T O R O N T O
S T O C K
E X C H A N G E
–
DZR
September 30, 2005
Diaz is an oil and gas exploration and development Company with land
holdings and production in Canada and the United States.
The
Company’s principal business is the exploration for and marketing of
natural gas with the majority of the Company’s revenue being generated
from gas production in Alberta and Texas.
The Company currently focuses its exploration activities on shallow gas
reservoirs in southern Alberta, a multi-zone oil and gas prospect in the
Harmattan area of central Alberta and a deep Wilcox gas play in Texas.
Recent Company Highlights
x
Alberta: Retlaw
–
2 recent gas wells
x
Texas: Allen Ranch – 14%
–
–
Initial well currently producing 5.8 MMcfd
Second well drilling at 14,400 feet – T.D. 16,800
x
Hound Dog – 28.1%
–
Initial well producing 4.0 MMcfd
Production
Cash Flow
2000
1600
1050
1200
BOEd
$000
1400
700
350
800
400
0
0
2005
Jan.
Oct.
Est.
2005
Jan.
Oct.
Est.
Financial and Operating Results
9 Months Ended
Sept. 30
2005
x
x
x
x
x
44
Cash flow (millions)
Cash flow per share
Production (BOEd)
Net debt (millions)
Shares issued (millions)
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
$
$
7.9
0.13
1,161
$
7.7
59.8
Years Ended December 31
Est.
2005
2004
2003
$
$
12.8
0.21
1,245
$
9.5
59.8
$
$
8.8
0.15
1,175
$
9.1
59.6
$
$
$
5.8
0.12
904
7.1
57.3
DIAZ RESOURCES LTD.
T O R O N T O
Summary of Reserves
Sept. 30, 2005
S T O C K
E X C H A N G E
–
DZR
Net Asset Value
Proved Probable Total
• Natural gas (Bcf)
15.9
12.6
28.5
• Oil (MBbl)
185
49
234
43
16
59
September 30
2005
• Oil & gas reserves @ 10%
• Undeveloped acreage
$
118.5
6.3
124.8
$
117.1
59.8
• Net debt
• NGLs (MBbl)
• Present value at 10%
$ 77.1 $ 41.4 $ 118.5
• MBOE
2,882
2,165
5,047
17.3
13.0
30.3
• Bcfe
(7.7)
• Net asset value
• Shares outstanding
• Options (average exercise price $0.53)
3.6
63.4
• Net asset value, per share (diluted)
$
1.88
Forward-Looking Statements
This summary is management’s assessment of selected historical, financial and operating
results of Diaz and should be read in conjunction with the MD&A and consolidated financial
statements of the Company for the year ended December 31, 2004, as well as interim
reports and other materials released by the Company from time to time, which are filed on
SEDAR at www.sedar.com.
Statements throughout this summary that are not historical facts may be considered
“forward-looking statements.” These forward-looking statements sometimes include words
to the effect that management believes or expects a stated condition or result. All estimates
and statements that describe the Company’s objectives, goals or future plans are forwardlooking statements. Since forward-looking statements address future events and
conditions, by their very nature they involve inherent risks and uncertainties. Actual results
could differ materially from those currently anticipated due to any number of factors,
including such variables as new information regarding recoverable reserves, changes in
demand for, and commodity prices of crude oil and natural gas, legislative, environmental
and other regulatory or political changes, competition in areas where the Company operates
and other factors discussed in this summary.
Basis of Presentation
BOE Presentation – The term barrels of oil equivalent (BOE) or billions of cubic feet of gas
equivalent (Bcfe) may be misleading, particularly if used in isolation. A BOE or Bcfe
conversion ratio of 6 Mcf: 1 Bbl is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value equivalency at the
wellhead. All BOE conversions in this report are derived by converting gas to oil in the
ratio of six thousand cubic feet of gas to one barrel of oil.
Company Net Present Value
The net present value is based on the engineering evaluation prepared by AJM Petroleum
Consultants with an effective date of September 30, 2005 (the “AJM Report”). The present
value of the Company’s reserves, presented in the table above, discounted at 10% before
income tax and 5% after income tax, is extracted from the AJM Report. Seaton Jordan &
Associates Ltd. has evaluated undeveloped acreage at September 30, 2005 (the “Seaton
Jordan Report”), in compliance with National Instrument 51-101 Standards of Disclosure for
Oil and Gas Activities (“NI 51-101”), after tax rates for the land value, assuming the land is
sold at the report date.
The Company’s net debt is based on its interim financial statements as at September 30,
2005 and does not include liability for future net income tax or asst retirement obligation.
The number of shares outstanding at September 30, 2005 was 59,815,000. Net asset
value per share has been fully diluted by 3,558,000 options to purchase common shares at
an average price of $0.53 per share and the implied proceeds have been added to the net
asset value.
It should not be assumed that net present value represents fair market value. Net
present value is dependent upon a number of critical assumptions including the
future price of commodities, the timing of production and the estimate of reserves.
Investment Merit
Share Trading – 2003 to Present
• Growing production and cash flow
$1.20
• High-impact, active exploration and
development program
$1.00
• Discount to net asset value
$0.80
$0.60
$0.40
$0.20
Jan-03
Jan-04
Jan-05
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
45
Galleon Energy Corporate Profile
Production History & Forecast
“Growth is Incremental”
Incremental”
Production (boepd)
12000
10000
8000
Galleon Energy - The Company
6000
4000
F
F
F
F
Listed on TSX – Symbols: GO.A & GO.B
31.8 million “A” shares and 0.9 million “B” shares
Management and directors own 13 % of diluted shares
Share prices:
“A” = $ 22.00 - $ 25.00,
“B” = $ 8.00 - $ 8.50
F Market Capitalization > $700 Million
2000
0
Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 2005 Q1/06 Q2/06
Exit
Oil+NGL
Galleon Energy - The Product
F Current production – over 9,000 boepd (+600 boepd
waiting to be tied in)
F Target production (boepd):
2005
Low
High
1st Half/05 Actual:
4,577
Q3/05 Actual:
8,064
Q4:
8,400 8,800
2005 Exit
8,800 9,200
Q1/06
9,200 9,600
Q2/06
10,000 10,400
F Excellent land position – access to over 750,000 acres –
the #2 largest land position in the Peace River Arch
area
F Large, multi-year exploration and development drilling
program in the Peace River Arch area
F Outstanding drilling over two years: 122 wells drilled,
96 wells cased (79% success rate)
F Large firm drilling inventory of over 150 locations
F Potential target production ~ 13,100 boepd
Gas
Range
5
GALLEON ENERGY INC.
Production Growth Per Share
“Good Explorer and Good Acquirer = Sustained Profitable Growth”
Growth”
Production (boepd)
per MM Basic Shares
2005 Dawson Deal #2
350
300
250
200
2004 Dawson Deal #1
150
Original Plan
100
Range
50
0
Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06
19
55
83
90 109 144 195 254 271 289 316
Drilling Leverage
6
Every 7 bcf reserves or 3 mmscfd production = $1.00 per share value
GALLEON ENERGY INC.
Corporate Financial Performance
Cashflow / Earnings
$MM
30
Galleon Energy – An Investment Opportunity
25
20
15
F Managers & directors – proven track records
F A balanced drilling inventory (over 150 drilling
locations)
F Small number of outstanding “A” shares – leverage
valuation growth ( 7 bcf / 3 mmcf/d = $1 per share)
F Exposure to significant discoveries
10
5
0
-5
Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05
Cashflow
Assumptions: $60/bbl US WTI, $10.00/mcf Cdn and FX = 0.83
19
46
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Earnings
GALLEON ENERGY INC.
Value Creation = Sustainable Production Growth
“Build real value through multimulti-year and multimulti-zone projects”
projects”
Galleon Energy Management
Steve Sugianto, President and CEO
Shivon Crabtree, Vice President and CFO
Tom Greschner, Vice President, Production
Lacey, Vice President, Exploration
BoardBrent
of Directors
Dale Orton, Manager, Engineering West
Carolee Pearce, Manager, Accounting
Devin Sundstrom, Manager, Engineering East
Chris Tibbles, Manager, Land
Jim Iverson, Chief Geologist
Marc Houle, Chief Geophysicist
Glenn R. Carley, Executive Chairman
10,000
9,000
8,000
6,000
4,000
2,000
Production (boepd)
Production (boepd)
13,100
Oct/03 Oct/04 Mar/05
Growth Driver
?
Nov/05 06
Production
(boepd)
Current
150 locations average 70% working
interest = 105 net wells
9,000
Behind pipe
600
Drilling potential
6,000
Potential Asset Sales
7
(500)
Decline
(2,000)
Target
13,100
GALLEON ENERGY INC.
Land & Drilling Inventory
“Fuel for Growth = Land + Drilling”
Drilling”
Galleon Energy Board of Directors
F
F
F
F
F
F
Total Drilling Inventory
(locations)
Land Access in PRA Areas
(000 acres)
200
800
150
600
100
400
50
200
Glenn Carley
Steve Sugianto
John Brussa
Fred Coles
William Cooke
Brad Munro
0
0
Dec/03
Dec/04
May/05
Nov/05
9
GALLEON ENERGY INC.
Galleon Energy Contact Information
Galleon Energy Inc.
Energy Plaza East Tower
500, 311 – 6th Avenue SW
Calgary, Alberta T2P 3H2
PRA Land Position – November 2005
R4
R2W6M
R24
R22
R20
R18
R16
R14
R12
R10W5M
T82
Office: 403.261.6012
Fax: 403.262.5561
T80
Dawson
T78
Calais
Email:
[email protected]
[email protected]
T76
T74
December 2003 – 191,000 acres
Website: www.galleonenergy.com
December 2004 – 385,000 acres
November 2005 – 750,000 acres
Grande
Prairie
December 5, 2005
> 90% year round access
10
T72
T70
New Land Deal
GALLEON ENERGY INC.
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
47
Corporate Profile
Third Quarter 2005
Great Plains Exploration Inc. is a Calgary, Alberta based oil
and natural gas company launched in June 2004. Great
Plains will grow from corporate acquisitions and will create
value from full-cycle exploration.
Gr ea t P la in s A t a G la nc e
Since commencing operations in June 2004, the GPX
team has:
•IIncreased production 300% from initial base of 500
boe/d to current production capability of over 2,000
boe/d; 55% natural gas
2006 Ca pi t a l E xpe n d it ur e B u dge t
For 2006, Great Plains’ Board of Directors has approved
a $32.0 million capital expenditure budget comprised of a
balanced prospect inventory with multiple high impact
plays.
•IIncreased reserve volumes 322% from 1.28 mmboe to
5.5 mmboe; 64% natural gas
Great Plains expects to drill 69 gross (28 net) wells during
the year, almost half of which will be operated. Nonoperated projects with Duvernay, Iteration and others
provides risk mitigation.
•IIncreased land base by over 1,300% from 13,500 to
197,000 net undeveloped acres – conservatively valued
at $19.7 MM
•C
Completed two corporate transactions acquiring
Energy Explorer (Sept/04) & Rock Creek (July/05)
$32.0 MM
Facilities
$5.5
Development
$12.8
Land
$2.8
Seismic
$3.5
•Reserve life index: 7.5 years (P&P) and 5.3 years
(Proved only)
•Established solid financial base, including $40.0 MM
credit facility
Exploration
$7.4
•T
Tax pools approximately $44.0 MM
The 2006 program has the potential to bring on 1,400
to 1,500 boe/d and add 2.3 mmboe of reserves.
Quarterly Production Growth
2000
300% increase from initial base
to current production capability
of over 2,000 boe/d
Five Fold Increase to Quarterly Cash Flow
($MM)
1500
5
4
(boe/d)
6
572% increase in cash flow for
third quarter 2005 compared to
same period in prior year
1000
3
500
2
1
0
0
Q3/04
48
Q4/04
Q1/05
Q2/05
Q3/05
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Initial
Q3/04
Q4/04
Q1/05
Q2/05
Q3/05 Current
C a s h F l o w N et ba c k s $ / b o e
P r o pe r t y O v er v ie w
Peace River
Arch
Gift/Athabasca
Pembina
Great Plains’ core areas
generally possess:
For the period ended Sept. 30
•Multi-zone potential
Oil and Gas Sales
Royalties, net of ARTC
Operating
Transportation
Operating Netback
Other Income
General and Administrative
Interest
Capital Taxes
Cash Flow Netback
•Stable production base
Edmonton
East Central
Calgary
SW Sask.
•Diversified
opportunities with
potential for significant
per share growth
H ig h I mpa c t P la y s
Three Months
2005
2004
65.62
(11.23)
(9.23)
(0.44)
44.72
0.23
(3.45)
(1.04)
(0.35)
40.11
40.83
(6.76)
(8.93)
(0.78)
24.36
0.09
(6.17)
(0.21)
(0.17)
17.90
W ho We Are
The following areas are Great Plains’ high impact plays that
have the potential to add significant per share increases:
Pembina, AB
x High netback Nisku oil
x Avg. target 1,000 boe/d wells from 5-8 mmbbl pools
x Eight to 12 locations identified from extensive 3-D
seismic base
Gift, AB
x Great Plains operated, high netback oil play, with
one year royalty holiday
x Average target 150 boe/d from 150,000 barrel single
well pools
x Five to eight locations identified for drilling and a
3-D seismic program planned for Q1/06
Altares, BC
x Potential targets average 1 to 2 mmcf/d producing
from 1 to 4 bcf of reserves / zone – aggregate net
potential of 10 to 20 bcf
x Five wells drilled and cased as gas discoveries with
multiple zones
x Prior to year end two further wells will be drilled
and pipeline construction will be underway; three
wells are planned for Q1/06
Officers
Stephen P. Gibson, President & CEO
Thomas K. Rouse, VP Finance & CFO
Robert R. Padget, Chief Operating Officer
Randall J. Faminow, VP Land
Curtis W. Labelle, VP Engineering
John N. Ostrom, VP Exploration
Directors
Garth A.C. MacRae, Chairman of the Board
William A. Bell
Donald K. Charter
Daryl H. Connolly
Stephen P. Gibson
Donald R. Leitch
Julio Poscente
S ha re I n f or m a t i on
Toronto Stock Exchange: GPX
Number of Shares Outstanding (Basic): 34.5 MM
52 Week Trading Range: $2.24 - $4.05
Reserve Volumes a nd Va lues (GPX & RCR)
Reserve
Category
Proved
Probable
Total
Total Oil
Equivalent
(mboe)
3,888
1,575
5,463
NPV 10% ($MM)
Before Income Taxes
April 05(1)
Oct. 05(2)
80.7
116.2
20.2
28.8
100.9
145.0
GPX and RCR reserves were evaluated by GLJ and AJM respectively. Both are
effective Dec. 31, 2004 and are based on the following forecast prices and costs:
(1)
Directors and management own or represent approximately 19%
April 2005: US $52.50/bbl WTI, CDN $7.50/mcf AECO-C Spot
(2)
Oct. 2005: US $61.87/bbl WTI, CDN $11.05/mcf AECO-C Spot
2300, 520 5th Avenue S.W., Calgary, Alberta, T2P 3R7
Tel: (403) 262-9620 Fax: (403) 262-9622
www.greatplainsexp.com
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
49
“ Exploring for Pumpkins
. . . not for Peas”
CORPORATE & FINANCIAL HIGHLIGHTS
The following milestones were achieved in 2004 and 2005:
•
January 2004 – Sold the Little Fish Lake natural gas property in southern Alberta which produced approximately 110 boed
for proceeds of $4.1 million.
•
April 2004 – Completed the reverse takeover of Troutline Investments Inc. (“Troutline”), which had previously combined
with Surge Petroleum Inc. and Invader Exploration Inc. The acquisition of Troutline gave the Company approximately 400
bbl/d of light oil production in southeast Saskatchewan, $15.7 million in cash, $29.1 million in tax losses and other tax pools
and a Toronto Stock Exchange Listing. The Company’s shares commenced trading as Innova Exploration Ltd. on April 22,
2004 – Symbol “IXL”.
•
April 2004 – Completed restructuring of the Board of Directors with the addition of Charles Vickers, Robert Hobbs and
Edward Sampson, each of whom bring a valuable range of experience for the guidance of our management team and representation of our shareholders.
•
April 2004 – Completed the construction of a new $2.0 million natural gas processing facility at Armada in southern
Alberta with the effect of reducing operating costs and increasing production on the Company’s largest wholly owned
producing property.
•
May 2004 – Completed the acquisition of Chowade Energy Inc. (“Chowade”) through the issuance of 1.2 million Innova
shares valued at $3.5 million. The acquisition of Chowade brought the Company a new core area with excellent exploration
potential. In addition, the co-founder of Chowade, Patrick R. Ward, P.Geol. joined Innova as Vice President Exploration.
Pat brings 25 years of Canadian exploration experience to Innova.
•
June 2004 – Negotiated a $15.1 million revolving line of credit to be used for funding capital programs.
•
August 2004 – Hired Edward J. Kalthoff as Vice President Land. Ed brings 23 years of senior oil and gas land experience as
Vice President with other rapid growth junior exploration companies to his post at Innova.
•
September 2004 – Hired Kelly D. Kerr as Vice President Finance. Kelly has 21 years of varied senior financial management
experience in the Calgary oil and gas business.
•
September 2004 – Closed a flow through share private placement for 0.5 million shares at $3.08 per share for total proceeds
of $1.5 million.
•
November 2004 – Approved a $35.9 million capital budget for 2005 including the drilling of 54 (27 net) wells, the shooting
of a 50 square mile 3-D seismic program and a 24 mmcfd (12 mmcfd net) gas plant in northeast British Columbia.
•
December 2004 – Closed a “bought deal” financing in the amount of $11.0 million consisting of 0.9 million flow through
shares at $4.50 per share and 2.0 million common shares at $3.65 per share. The proceeds were used to fill the treasury to
provide funding for the 2005 capital program.
•
May 2005 - Completed the acquisition of Globex Resources Ltd. through the issuance of 7.3 million shares valued at $38.3
million. Innova acquired 1,000 boed of production with minimal associated G & A expense, 10,000 net acres of complimentary undeveloped land in southeast Saskatchewan and a potential new core area in the Peace River Arch area of northwestern Alberta
•
September 2005 - acquired 42,700 (23,800) net acres of exploration land at Chowade / Blair in mortheast BC for approximately $23 million
•
October 2005 - closed 4.3 million share prospectus offering raising $35.0 million at $8.20/share
Average Production (boed)
CORPORATE OVERVIEW (Q3)
•
•
•
•
•
•
•
•
Stock Listing..................................................... IXL
Outstanding Shares ....................................... 39.3 million*
Production ....................................................... 2,575 boed
Proved plus Probable Reserves................... 5.3 mboe**
Working Capital (deficit)............................... ($40.3) mm
Debt................................................................... ($22.8) mm
Bank Line (limit)............................................. $26.0 mm
Tax Pools........................................................... $102.0 mm
* Includes 4.3 million shares issued on October 31, 2005 for $35.0 million
** December 31, 2004 proforma
50
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
*05
04
03
2,400 - 2,600
1,429
601
Cash Flow ($millions)
*05
04
03
29.0
10.2
4.1
* Company guidance
British Columbia
Alberta
Saskatchewan
Blair
Gordon Dale
Chowade
CENTRAL
ALBERTA
PROJECT
Simonette
Chip Lake
EDMONTON
SASKATOON
Gas Property
CALGARY
Oil Property
REGINA
Parkland
Production
Exploration
Armada SOUTHERN
ALBERTA
PROJECT
Pheasa
SOUTHEAST
Handsworth
SASKATCHEWAN Innes
PROJECT
Stoughton /
Viewfield
EXPLORATION AND DEVELOPMENT HIGHLIGHTS
Central and Southern Alberta
Pumkin: defined by IXL as a prospect with reserve potential greater
than 1mmboe.
Exploration prospecting areas: ........................... (“pumpkin seeds”)
• Multi-zone gas and oil production and reserves: ..Prospecting and
Pumpkin Seed: defined by IXL as a prospect that with future land
acquisitions and drilling could grow to be a “pumpkin”.
maintenance
Undeveloped Land Holdings:........ 71,000 gross (35,000 net) acres
Northeast British Columbia
Emerging Cretaceous exploration play:
...................... (“pumpkin”)
• Multi-zone gas & liquids production and reserves: .. Major 2005
exploration growth area
• Undeveloped Land Holdings: ... 112,000 gross ( 68,000 net) acres*
• Innova average working interest: ................................. 61%
• 2005 Q3 Production: .........300 boed ( 95% sweet gas, 5% liquids)
• 2005 Wells Drilled: ............ 11 gross (7 net) wells – 100% success
• 2005 Risked Budget: .................................... $ 63.3 million
• 2005 Drilling Plans: .................................. 23 (15 net) wells
• 2005 New 24 mmcfd gas plant on stream end October 2005 –
Innova has 50% WI
• 2005 - 50 square mile 3-D seismic program
• 2006 - 150 square mile 3-D seismic program planned
•
• Innova average working interest: .................................. 49%
• 2005 Q3 Production: .................... 1,465 boed (91% gas, 9% oil)
• 2005 Wells Drilled: ............... 20 gross (8 net) wells – 80% success
• 2005 Risked Budget: ....................................... $ 7.2 million
• 2005 Drilling Plans: .................................. 20 (9.6 net) wells
Southeast Saskatchewan
Multi-zone oil production and reserves:......................... (“Pumpkin”)
• Bakken exploration prospect: . Major 2005 exploration growth area
• Undeveloped Land Holdings: ....... 80,000 Gross (48,000 net) acres
• Innova Average Working Interest:........................................ 60%
• 2005 Q3 Production: ................................. 810 bbl/d - (100% oil)
• 2005 Wells Drilled:..............................22.0 (12 net) – 95% success
• 2005 Risked Budget:.............................................. $ 27.5 million
• 2005 Drilling Plans:................................32 Gross (17.0 net) wells
*Includes 31,850 (15,925 net) acres of option land.
MANAGEMENT
Kevin J. Gibson
Stephen M. Gibson
Edward J. Kalthoff
Kelly D. Kerr
Glen A. Tanaka
Patrick R. Ward
Michael R. Smillie
President & CEO
VP Operations
VP Land
VP Finance & CFO
VP Corporate Development & COO
VP Exploration
Controller
DIRECTORS
HEAD OFFICE
George B. de Boon
Daryl S. Fridhandler (Chairman),
Kevin J. Gibson,
Robert R. Hobbs,
Gabor Jelinek,
Edward S. Sampson,
F. Charles Vickers Jr.
Suite 900, 407 - 2nd Street SW,
Calgary, Alberta T2P 2Y3
[p] 403.274.7767
[f] 403.274.5366
[e] [email protected]
www.innovaexploration.com
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
51
Outlook: Production boe/d
1400
1200
1200
900
1000
800
CORPORATE PROFILE
677
711
2003
2004
600
400
RGY: TSX-V
200
November 30/05 Price: $1.81
0
2005E 2005 Exit
2005 Highlights:
Background:
¾
Rival Energy Ltd. originated with the takeover and recapitalization of a shell company (Longview Petroleum
Corporation) in late 2002 by a new management team led by
Colin F. Ogilvy (OGY Petroleums Ltd. & Hillcrest Resources
Ltd.). In mid-2003, Rival Energy merged with Roseland
Resources Ltd. and completed a small natural gas property
acquisition to establish a foundation of production for the
company.
Rival’s growth strategy continues to produce positive results.
With the recent drilling success and production growth, Rival is
now expanding its exploration program into central Alberta and
the Peace River Arch areas.
¾
¾
¾
¾
¾
¾
¾
Third quarter cash flow of $3 million or
$0.16 per share ($0.64 annualized).
2005 forecast cash flow of $9 million or
$0.45 per share based on average 2005
production of 900 boepd.
Current production of 1,100 boepd with
100 boepd behind pipe awaiting tie-in.
2005 exit target of 1,200 boepd.
2006 capital budget of $12-15 million
Debt less than 0.5 times cash flow.
Tax pools of $19 million.
Insiders own 18% of outstanding shares.
Highlights Table: September 30, 2005
Three Months Ended
September 30
Financial
Oil & gas sales
Cash flow from operations
Net income
Cash flow per share
Net income per share
Average shares outstanding (000)
Operating (6:1 Boe)
Average daily production
Natural gas (mcfd)
Oil and NGL (bblsd)
Barrels of oil equivalent (boed)
Average Sales Price
Natural gas ($/mcf)
Oil and NGL ($/bbl)
Nine Months Ended
September 30
2005
$5,121,099
2,988,970
1,288,740
0.16
0.07
19,121
2004
$2,601,819
1,017,898
64,663
0.05
0.00
19,233
Percent
Change
97
194
1893
220
1903
(1)
2,820
444
914
2,729
226
681
3
97
34
$ 9.43
66.25
$ 6.32
48.16
49
38
2005
$11,744,157
6,040,682
1,931,598
0.32
0.10
19,121
2,947
338
829
$ 7.88
58.63
2004
$7,821,421
3,246,743
419,153
0.17
0.02
19,206
Percent
Change
50
86
361
88
400
0
2,759
241
701
7
40
18
$ 6.51
43.60
21
34
Corporate Performance:
Rival’s drilling success continues in its core areas. Killam and Bellshill have provided significant production growth in oil
volumes for Rival and the Robsart area of Sask. continues to offer a number of shallow gas drilling opportunities. The
recent additions to Rival’s technical team bring a strong balance of exploration and exploitation expertise to the Company.
With this technical strength, growing production volumes, strong cash flow and a low debt to cash flow ratio, Rival is well
positioned to continue to post record results as we continue to execute our corporate strategy.
52
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Core Areas:
¾
¾
¾
East central Alberta – This area offers high quality light oil and natural gas reservoirs at shallower depths with year-round
access and available infrastructure. Rival has been very successful in its pursuit of these light oil pools and continues to
explore for multi-zone natural gas prospects within this area.
Central W5M and the Peace River Arch are new areas of concentration for Rival. The recent additions to our technical
team have a track record of success in these areas and we expect to be active in these areas early in 2006
Robsart remains the Company’s shallow natural gas focus area. The area continues to provide Rival with additional
drilling opportunities as our drilling program is executed and additional geophysical work is completed.
2005 Operating Results:
To date, Rival has completed and placed on production nine wells (drilled in late 2004) and has subsequently drilled nine
new wells to date and re-completed another two wells. With nine of these new operations being successful, our results to
date yield a success ratio of 82 percent. Corporate production is currently 1,100 boepd with 100 boepd behind pipe ready
to be brought on stream once facilities are in-place. Rival expects to reach its 2005 targeted exit rate of 1,200 boepd.
Rival has developed its Killam oil discovery this year and now has five wells in this pool producing significant oil volumes for
the Company. Recent operations have provided Rival with another oil development opportunity in east central Alberta. This
prospect will be further delineated in early 2006 once the new wells have been subject to an extensive production test and
all approvals are received for its development.
In the central W5M and Peace River Arch areas of Alberta, Rival has recently completed an exploration farmin, is
negotiating on a few more opportunities and will be participating in several land sales over the next few months to establish
a stronger presence within these new core areas. Participation in these areas is expected to complement the company’s
shallower oil and natural gas opportunities with a few higher impact plays and allow Rival to benefit from the knowledge
and experience of the two senior geologists that recently joined the Company
Cash Flow Per Share- Quarterly
$0.18
0.16
Outlook: Cash Flow Per Share
$0.50
$0.16
$0.45
$0.14
$0.40
$0.12
$0.35
$0.08
$0.30
0.09
$0.10
0.45
$0.25
0.07
0.20
0.23
$0.20
$0.06
$0.15
$0.04
$0.10
$0.02
$0.05
$0.00
$0.00
Q1/05
Q2/05
Q3/05
2003
2004
DIRECTORS:
CONTACT INFORMATION:
Telephone:
1700, 333 - 5 Avenue SW
Calgary, AB T2P 3B6
(403) 233-0039
Fax:
(403) 265-8452
Larry M. Jones
Colin F. Ogilvy
Douglas R. Martin
F.K. Roy Gillespie
Harley L. Winger
Email:
[email protected]
MANAGEMENT:
Website:
www.rivalenergy.com
Contact Person:
Colin Ogilvy
Colin F. Ogilvy, President & CEO:
George D. Ziroff, VP Finance:
John E. Clark, VP Engineering:
John C. Wilson, VP Exploration:
Ron G. Britton, Senior Geologist
Joe Pozzobon, Senior Geologist
Clarence Murray, Operations Mgr.
R. Kenneth Pretty, Manager, Land
Head Office:
th
SHARES OUTSTANDING November 30, 2005
Basic
Fully-diluted
19,808,781
21,678,781
2005E
28 years exp.
28 years exp.
29 years exp
27 years exp
28 years exp
27 years exp
37 years exp
24 years exp
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
53
54
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
55
CORPORATE P RO FIL E • D E C E M B
BE
ER 2005
TS X : VL E
Valiant Energy Inc. is a publicly
traded Canadian company in
the business of acquiring crude
oil and natural gas properties
and exploring for, developing
and
producing
crude
oil
and natural gas. Properties
are focused in Alberta and
northeast British Columbia.
Valiant’s growth strategy involves
focused exploration, generated
internally by the company’s team
of experienced explorationists,
while simultaneously seeking
complementary
and
strategic
acquisitions, underpinned by a
robust balance sheet. At current
pace, Valiant has more than two
years of drilling, exploration
and
development
projects,
and the financial strength to
manage
capital
requirements.
Valiant’s common shares are listed
on the Toronto Stock Exchange
under the symbol VLE.
RECENT HIGHLIGHTS
October 4, 2005
Valiant announced a $6 million flow-through share financing agreement. Valiant will issue
1,091,000 shares at a $5.50 per share. The offering closed on October 19, 2005.
October 1, 2005
Valiant welcomed Mr. Steve Glover aboard as Vice President Finance. Mr. Glover brings over
twenty years experience as the executive director of the Institute of Chartered Accountants of
Alberta (ICAA). He has received an FCA designation for meritorious service to the profession,
and has represented Canada on the education committee of the International Federation of
Chartered Accountants. Mr. Glover’s skills in the areas of organization, motivation and integrity
make him a valuable asset to the Valiant team.
INV E S TOR I N F O
Toronto Stock Exchange:
VLE
Share Price (as at November 30, 2005):
$3.89
Shares Outstanding (basic):
17.3 million
Undeveloped Land
94,000 acres
2005 Capital Expenditures
$15 million
T R AC K R E COR D
Forte Resources Value Creation
• Production: grew to 3,300 boe/d
• Reserves: grew to 6.5 mmboe
• Cash Flow: grew to $0.80/share
(Q1 annualized)
M ANAG
ANAGEMENT
EM ENT
$5.00
R. Bruce Hammond, President and C.O.O
Doug N. Baker, C.F.O
Christine Robertson, VP Engineering
Steve Glover, VP Finance
Thomas J. MacKay
R. Bruce Hammond
Doug N. Baker
W. Peter Comber, CA
Gregory S. Fletcher
David V. Richards, FCA
Glen D. Roane
Share Price
D I RECTORS
$4.00
Valiant Energy
Forte Energy
$3.00
$2.00
Forte Oil/
Forte Resources
$1.00
$0.00
1997
56
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
1998
1999
2000
2001
2002
2003
2004
2005
T SX : VL E
O P E R AT I O N S
Laprise, BC
Grande Prairie, AB
Multi-zone gas & oil prospect
• Bluesky gas exploration
• Five locations budgeted for 2006 on trend
with Q1 2005 discovery (on production)
• 130 km2 seismic program
Peace River Arch prospects
• 2+ bcf per well
• > 30,000 net undeveloped acres
• Multi-zone gas targets include
Halfway, Montney, Banff
Banff prospect
• 5 bcf per section,
analogous pools 25+ bcf
• 6-3 licensing, by-passed pay
• Exploratory trend to north
• 2,800 metre depth
• Acquired 3D seismic
Western Canada
CORE AREAS
Laprise/Sojer
West Central AB
or
pl
Ex
• Deep Basin gas play
• Dual zone, three mmcf/d combined gas discovery in Q4 2004
• One zone on production at 1.5 mmcf/d, September 1, 2005
• First two development locations successful - test rates of 3.5 and
1.5 mmcf/d, and tie-in in Q4
• Expanding land base
Grande Prairie
io
at
West Central
n
Leaman/Niton
ay
irw
Fa
Leaman, AB
EDMONTON
CALGARY
• Prolific Paleozoic oil discovery
• Valiant operated with greater than 94 percent working interest
• 100 percent success rate on ten wells drilled to date
• Two additional locations before year-end
• Initial production capacity per well 100 to 600 boe/d
• New battery and gas conservation complete
Niton, AB
• Active drilling program
• More than 20,000 net acres undeveloped land
• Valiant operated and year round access
• Exploration and development opportunities
• Extensive seismic base
LO O K I N G FORWARD
LOOKING
F O RWA R D TO 2006
P RO D U C T IO
I O N ( b oe / d)
1200
Start year at 1,200 boe/d
1000
Budget $33.5 million capital expenditures
800
45 (27 net) exploration and development wells
600
Majority of locations are Valiant operated and in core areas of focus
Well positioned for continued growth through the drill bit
400
200
0
July 6/05
Aug 15/05
Sept 30/05
Dec 31/05
(forecast)
2400, 500 - 4th Avenue SW | Calgary, Alberta | Canada T2P 2V6
Tel: (403) 237-5163
Fax: (403) 237-5256
Email: [email protected]
Web: www.valiantenergy.ca
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
57
December 2005
www.zapata.ca
TSX-V : ZCO
CORPORATE PROFILE
STOCK CHART
(as of December 1, 2005)
Z
APATA ENERGY CORPORATION
is a junior public Canadian
resource company with oil and gas
production and processing facilities
and undeveloped petroleum and
natural gas rights in Alberta and
British Columbia, Canada. Financially
sound and conservatively managed,
the Corporation uses a balance of
drilling and acquisitions to develop
a promising and diversified portfolio
of energy assets with reasonable risks
and the potential for strong, stable cash
flow and competitive rates of return.
Trading Symbol (TSX Venture):
ZCO
Share Price (Close Nov. 28/05):
$13.20
Basic Shares Outstanding:
8,214,589
Diluted Shares Outstanding:
8,779,589
Market Capitalization:
$104.6 million
3,500
PRODUCTION
2005
2,500
Production sales in the third quarter and first nine months of
2005 averaged 2,778 and 2,961 barrels of oil equivalent per day
respectively, increasing 12 percent year-over-year for the nine-month
period. Field netbacks year-over-year increased 35 percent for the
third quarter and 26 percent for the nine-month period.
Q3 2005 HIGHLIGHTS
Three months ended
September 30, 2005
2004
Production Mix
FINANCIAL
49%
Natural Gas
(000 unless otherwise noted)
Gross Revenue
Cash Flow
Per share (basic)
Per share (diluted)
Net Income
Per share (basic)
Per share (diluted)
Capital Expenditures
Bank Debt and Working
Capital Deficiency
Shares Outstanding
(weighted average)
Basic
Diluted
OPERATIONAL
Natural Gas Sales (mcf/d)
Average Sales Price ($/mcf)
Oil Sales (bbls/d)
Average Sales Price ($/bbl)
NGL Sales (bbls/d)
Average Sales Price ($/bbl)
Total Sales (boe/d at 6:1)
Average Sales Price ($/boe)
58
$ 14,604 $ 12,252
6,029
7,397
0.75
0.90
0.70
0.87
2,672
3,552
0.33
0.43
0.31
0.42
7,395
5,914
25,804
Average barrels of oil
equivalent produced
per day for the year
3,000
28,485
8,199
8,485
8,030
8,648
8,135
9.02
1,278
60.05
145
59.44
2,778
57.13
9,816
6.52
1,321
48.71
164
45.24
3,121
43.50
51% Oil
and NGL
2,000
1,500
1,000
500
0
99
20.00
16.00
NET ASSET VALUE
Zapata trades below its net asset value per share based on 2004
year-end reserves. As at December 31, 2004, management estimated
the Corporation’s NAV per share (diluted) was $17.77 at the end of
2004. Since then, commodity prices have increased significantly and
are expected to be reflected in the Corporation’s NAV for 2005. On
November 25, 2005, Zapata closed at $12.76 per share, a 28 percent
discount to its Dec. 31, 2004 NAV per share.
01
02
03
04
03
04
Net asset value
per share
(diluted)
$
12.00
8.00
4.00
0
99
12,000
9,000
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
00
00
01
02
Oil and gas reserves
at year end
measured in
thousands of barrels
of oil equivalent
RESERVES
6,000
Zapata’s gross proved plus probable reserves, evaluated by Sproule
Associates Limited, increased by nine percent to 11.7 mmboe as at
December 31, 2004, from 10.7 mmboe at year end 2003.
3,000
0
99
00
01
02
03
04
December 2005
www.zapata.ca
TSX-V : ZCO
CORPORATE PROFILE
2004 SALES BY AREA (Numbers may not add exactly due to rounding)
West Central Alberta
Southeast Alberta
East Central Alberta
Minor Properties
TOTAL
Gas
mcf/d
1,622
4,747
1,428
960
8,757
Oil/NGL
bbls/d
172
91
1,015
52
1,331
Total
boe/d
442
882
1,253
212
2,790
2004
%
Sales
16
32
45
8
100
LAND
Gas
mcf/d
1,427
2,654
716
1,363
6,160
Oil/NGL
bbls/d
82
48
629
163
922
Total
boe/d
320
490
748
390
1,948
2003
%
Sales
16
25
38
20
100
DRILLING PROGRAM
As at Dec. 31, 2004, Zapata’s land portfolio consists of 86,018 gross (48,761 net) hectares
– equivalent to 336 (190 net) sections. The Corporation’s undeveloped inventory decreased
to 51,461 (32,380 net) hectares as a result of its development drilling program in 2004.
Zapata’s undeveloped land portfolio and prospects in its core areas were critical ingredients
in the Corporation’s 2004 drilling success. While continuing to drill and develop its land
portfolio, Zapata is also adding to its land and prospect base to ensure a continuous, longterm exploitation program. At the same time, Zapata continues to maximize its working
interests by acquiring interests in its current properties.
In the third quarter of 2005, Zapata participated in
drilling six (5.5 net) wells, resulting in five (4.5 net)
gas wells and one net oil well. This year to date,
Zapata participated in drilling a total of 27 (12.7)
wells, resulting in 22 (8.0 net) gas wells, three 100
percent-owned oil wells and two (1.0 net) standing
wells. In 2004, Zapata drilled 39 (28.7 net) wells,
resulting in 18 (9.6 net) gas wells and 14 (12.8 net)
oil wells for an 82 percent success rate.
BOARD OF DIRECTORS
LLOYD DRISCOLL
Chairman & CEO
Zapata Energy Corporation
GEORGE PAULUS
President & CFO
Zapata Energy Corporation
ROBERT BRAWN
Chairman Emeritus
Acclaim Energy Trust
A L B E R TA
ALLEN EMES
Investment Banker
West Central
East Central
CONTACT INFORMATION
Suite 500,
435 - 4th Avenue SW
Calgary, Alberta
Canada
T2P 3A8
Tel : (403) 261-7355
Fax : (403) 294-7877
South East
E-mail : [email protected]
www.zapata.ca
TSX Venture Exchange : ZCO
IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
59
60
THIRD QUARTER 2005 • IRADESSO COMMUNICATIONS
Company
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Exchange/Symbol
T = TSX
V = TSX Venture
V-ADB
V-ANG
T-AEN, AIM-AEY
V-ABG
T-AEI, Frankfurt-AIE
V-ARY
T-BNK, AIM-BNK
T-BVX
T-CVI.A
T-SNG, AMEX-SNG
T-CAX
V-CNS
T-CEK, AIM-CEK
T-CUX, AIM-CUX.L
T-DZR
V-EBY
V-EUG
T-FCP
T-HOC
T-IE & IE.U, NASDAQ-IVAN
V-KEE
V-KRS
V-LEY
T-CBM
T-NKO
T-OIL, AIM-OIL
V-OCL, Frankfurt-O2E
T-POC.SV.B & POC.MV.A
T-PBG & PBG.NT.A
T-PFC
T-PDP
V-PEH
T-RRL
V-SHY
V-SME, AMEX-SCU
V-TAO, OTCBB-TAGOF
V-TYK, Stockholm Exchange - TYKS
V-TEX.A
T-TNP.U
T-TGL, AMEX-TGA
V-TPC
V-URP, CNQ-URP
T-VNX
V-WIX
Nov. 30
Closing
Price
($)
0.90
0.77
1.89
1.38
1.29
0.42
1.35
4.97
3.30
2.38
0.60
0.88
2.18
9.90
0.99
0.23
1.38
6.84
13.00
1.75
1.09
0.42
0.59
5.81
46.40
3.96
0.58
25.11
8.29
2.17
4.15
1.47
0.90
0.56
2.80
0.75
8.00
0.15
0.80
6.19
0.34
0.60
3.10
2.15
Q3 2005
Average
Production
(boe/d)
n/a
n/a
1,007
6,265
1,562
n/a
1,793
2,744
n/a
2,705
1,237
n/a
334
24,277
1,161
n/a
n/a
n/a
513
1,902
n/a
n/a
40
625
14,110
258
n/a
9,127
3,538
826
296
n/a
n/a
n/a
538
n/a
1,382
54
n/a
5,285
n/a
n/a
75
416
Head Office
Toronto
Calgary
Calgary
Anguilla, British West Indies
Calgary
Calgary
Vancouver
Calgary
Calgary
Calgary
Toronto
Calgary
Calgary
Calgary, Toronto & Kazakhstan
Calgary
Calgary
Calgary
Calgary
Calgary
Vancouver
Calgary
Calgary
Calgary
Calgary
Calgary
Calgary
Vancouver
Jersey, Channel Islands
Calgary
Carpinteria, California
Calgary
London, UK
Calgary
Calgary
Denver & Calgary
Calgary
Vancouver
Calgary
Calgary
Calgary
Houston & Vancouver
Toronto
Calgary
Calgary
International Oil & Gas
Companies Comparison
Active Countries
United States
Canada, United States
Argentina, UK North Sea, Tanzania, Northern Ireland
Azerbaijan, Russia, Kazakhstan
Canada, United States, Egypt
Australia, Northern Ireland
Albania, United States
UK North Sea, Canada
Yemen, Canada
Canada, Trinidad & Tobago
Tunisia
India
Kazakhstan
Egypt, Tunisia, Nigeria
Canada, United States
Canada, United States
Spain, Tunisia
Algeria
Republic of Congo & Uganda, Oman
China, United States
Vietnam, Canada
Trinidad, Ukraine
Canada, Slovenia, Colombia
Canada & United States
India, Bangladesh
Central North Sea, United States
Romania, Yemen
Gabon
Colombia, Canada
Venezuela
Argentina, Peru
China
United States
United States, Canada
Monglia, United States, Canada
New Zealand
Egypt, Syria
Canada, Australia
Morocco, Turkey, United States, Nigeria
Yemen, Canada, Egypt
United States, Guatemala
Central African Republic
Libya, France, Canada
Canada, Tunisia, Hungary
of queries about companies
listed in Canada who have
from Western Canada, they
any additions are welcome.
Key Executive
Steven Tedesco
Donald Foulkes
Stephen Greer
Alastair McBain
Michael S. Vandale
David A. Little
Richard Wadsworth
Robert G. Moffat
Edmund M. Shimoon
Greg S. Noval
Michael Wood
Les Kondratoff
William G. Ramsay
Said Arrata
Robert W. Lamond
Shelby Beattie
M. Jaffar Khan
Richard G. Anderson
Micael Gulbenkian
David Martin
Loren Komperdo
Fred Callaway
Norman W. Holton
Duncan Chisholm
Edward Sampson
Arthur S. Millholland
Nasim Tyab
Paul L. Keyes
John D. Wright
Juan Francisco Clerico
Richard A. Gusella
Peter Kelty
D. M. Bud McDonald
Robert W. Lamond
J. Scott Zimmerman
Drew Cadenhead
Lukas H. Lundin
William Nixon
Scott C. Larsen
Ross G. Clarkson
Robert E. Chamberlain, Jr.
Michael Coulter
James D. McFarland
David Monachello
Due to the ever-changing pace of the oil & gas industry, we have had an increasing number
with international production. We have compiled this list of companies based out of and
production from international countries. As some of these companies also have production
appear in the main comparisons of the iQ report as well. This list is not exhaustive and
Canaccord Capital
Investing in Oil & Gas?
For a free, no obligation copy of Canaccord Capital’s Weekly
Energy Outlook please e-mail Dominic Spooner, MBA at
[email protected].
Canaccord’s Weekly Energy Outlook, provides a
comprehensive weekly summary, of commodity news,
industry activity, market performance, corporate developments, managements changes, and equity financings
throughout the North American and International Energy
Industry. The Weekly Energy Outlook is published by
Canaccord’s Energy Analysts, Terry Peters, MBA, Richard
Wyman, MBA and Martin Pelletier, CFA.
Canaccord Capital is Canada’s largest full-service, independent investment dealer. From making
money to managing money, Canaccord Capital provides a complete range of financial
services to meet the unique needs of a broad and varied range of private and corporate clients.
MEMBER OF ALL CANADIAN STOCK EXCHANGES AND THE INVESTMENT DEALERS ASSOCIATION OF CANADA
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IRADESSO COMMUNICATIONS • THIRD QUARTER 2005
61
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